A strong Australian labor market report reinforced the RBA’s hawkish stance. Banks in Thailand and the Philippines cut interest rates

At the end of Wednesday, the Dow Jones Index (US30) was up 0.79%, the S&P 500 Index (US500) was up 0.47%, and the NASDAQ Technology Index (US100) closed positive 0.07%. Stronger-than-expected corporate earnings results supported stocks. In addition, a weaker-than-expected UK consumer price report for September lowered global bond yields, which was favorable for equities.

Morgan Stanley (MS) closed higher by more than 6% after reporting Q3 net revenue of $15.38 billion, beating the consensus estimate of $14.35 billion. Cisco Systems (CSCO) stock price rose more than 4% and led the Dow Jones Industrials after Citigroup upgraded the stock to “buy” from “neutral” with a $62 price target. Intel’s (INTC) stock price declined more than 1% and topped the Dow Jones Industrials losers list after the Cybersecurity Association of China proposed a cybersecurity review of Intel products sold in China.

The Mexican peso slid to 19.9 per US dollar, hitting a one-month low, as external and domestic pressures intensified the need to ease borrowing conditions. Former US President Donald Trump’s threat to impose up to 300% tariffs on Mexican-made cars has raised fears of disruption in Mexico’s vital auto sector, heightened by his growing electoral prospects. In addition, an IMF report further warned of a slowing economy, saying growth will slow to 1.5% this year despite fiscal stimulus. Bank of Mexico meeting minutes emphasized the need for a less tight monetary policy, while a Banxico survey showed that economists estimate the Central Bank will cut rates by 50 bps by the end of the year. 

Equity markets in Europe declined on Wednesday. Germany’s DAX (DE40) fell by 0.27%, France’s CAC 40 (FR40) closed down 0.40%, Spain’s IBEX 35 (ES35) gained 0.56%, and the UK’s FTSE 100 (UK100) closed up 0.97% to its highest level in six weeks, thanks to lower-than-expected UK inflation data that raised the likelihood of an additional interest rate cut by the Bank of England. Investors now expect the Bank of England to cut the rate by 45 bps by the end of the year, down from 37 bps before the inflation report was released. The Central Bank is expected to cut borrowing costs by 25 bps next month. 

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 1.83%, China’s FTSE China A50 (CHA50) lost 0.53%, Hong Kong’s Hang Seng (HK50) decreased by 0.16%, and Australia’s ASX 200 (AU200) was negative 0.41%. 

The Bank of Thailand unexpectedly cut its key interest rate by 25 basis points to 2.25% at its October meeting, the first-rate cut since early 2020. The decision came amid a sluggish economy and inflation remaining below the lower end of the target range of 1% to 3%. Thailand’s economy is expected to grow close to the projected 2.7% in 2024 and 2.9% in 2025, driven by tourism, private consumption and improved exports of electronic products.

The Central Bank of the Philippines cut its benchmark interest rate by 25 basis points to 6% during its October 2024 policy meeting, the second consecutive rate cut in line with market expectations. The BSP governor emphasized that the Central Bank’s assessment drove the decision that price pressures remain manageable. The latest data showed that the country’s annual inflation rate slowed sharply to 1.9% in September 2024 from 3.3% in the previous month and was below market expectations of 2.5%. This also marked the lowest inflation rate since May 2020. The BSP also raised its inflation projection for 2025 and 2026 to 3.3% and 3.7% from previous estimates of 2.9% and 3.3%.

China announced that it will expand credit support to 4 trillion yuan to help struggling real estate developers ease purchase restrictions, ensure timely delivery of homes, and lower mortgage rates to boost homebuyer confidence. 

A strong Australian jobs report lifted market sentiment and reinforced hawkish views on the Reserve Bank of Australia’s monetary policy. The data showed that the Australian economy added 64,100 jobs in September, well above the estimate of 25,000, while the unemployment rate remained at 4.1%. Following the release of the data, markets lowered bets on a December RBA rate cut.