Tonight's Big Market Prep!

Overnight, spot gold experienced a slight decline, reaching a daily high of $2,745.81 and a low of $2,724.55, eventually closing at $2,742.17. Today, during European trading hours, gold has edged up slightly and is currently hovering around $2,756.

Chinese assets are soaring!

Overseas, the three major U.S. stock indices collectively opened higher and continued to rise, with the Dow Jones Industrial Average increasing by 0.65% to close at 42,387.57 points; the S&P 500 increased by 0.27% to close at 5,823.52 points; the Nasdaq Composite Index rose by 0.26% to close at 18,567.19 points, approaching historical highs.

Next, the U.S. stock market is set to enter the busiest week of the third-quarter earnings season, with five out of the seven major U.S. technology companies—Alphabet, Microsoft, Meta Platforms, Amazon, and Apple—scheduled to release their latest financial reports. The market anticipates that these large-cap tech stocks' earnings reports will push the Nasdaq to new highs this week.

According to Wind data, the total market value of the "seven giants" accounts for about 30% of the S&P 500 index. In the first half of the year, the Wind U.S. Technology Seven Giants Index accumulated a gain of 31.9%, leading the S&P 500 with strong growth. The market believes that the robust performance of technology stocks was the main driving force behind the S&P index's repeated historical highs in the first half of the year.

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In addition, the market is closely monitoring a series of economic data to be released this week. On Wednesday, the U.S. third-quarter GDP will be released, followed by the Federal Reserve's preferred inflation indicator on Thursday, and the October non-farm employment report on Friday. The U.S. October ISM Manufacturing PMI, which serves as a barometer of the economic cycle, will also be released on Friday.

It can be said that the real risk this week starts on Wednesday and reaches a climax on Friday.

Currently, the non-farm data previous value is 254,000, and the market expectation is 120,000. For the much-anticipated non-farm employment data, regardless of whether it is good or bad, it will cause significant market fluctuations.

Firstly, the market expectation for this data is too far from the previous value, with the expected value being only half of the previous value. Even if it exceeds market expectations, it is impossible to determine whether it is good or bad. Secondly, if the data is positive, this would be the worst-case scenario, providing evidence for the Federal Reserve to pause interest rate cuts.

After the data is released, the market's probability of whether the Federal Reserve will cut interest rates in November is likely to be a "fifty-fifty" split, which would then enter a period of high consensus deficit. However, if it falls below market expectations, it will deeply shock the market—a scenario that is very likely to occur.For the US stock market, despite this time, under different economic circumstances, the signals are more mixed. The outstanding performance of financial and industrial stocks indicates that the direction of market changes is somewhat similar to 2016.

According to the latest research report from Bank of America Merrill Lynch, the vulnerability facing the US stock market has reached a record level, which makes investors wary of the upcoming earnings season. The report points out that 2024 has become one of the most volatile years for the US stock market in the past two decades, especially after the release of earnings reports, this volatility is particularly evident.

It is also worth mentioning that overnight, Chinese assets have exploded in the US stock market.

According to Wind data, as of the close of the day, the NASDAQ Golden Dragon China Index rose by 4.05%, and the China Dragon ETF increased by 1.89%; the FTSE China A50 Index futures, known as one of the forward-looking indicators of A-shares, surged straight up during the night trading session, turning from a decline to an increase.

At this time, the allocation of foreign capital in the Asian market has taken a new direction.

According to the latest research report from HSBC, overseas Asian funds are withdrawing funds from the Indian and South Korean markets and actively building positions in the Chinese market. It shows that in September of this year, overseas Asian funds actively established positions in the A-share market, which is the first time in 10 months that overseas growth funds have increased their holdings in the Chinese mainland market.

The report states that as of October this year, overseas institutional investors have sold $8 billion worth of Indian stocks, which is the largest single-month capital outflow since the beginning of 2020. Most of the reduced funds have flowed towards the Chinese market.

Gold trend analysis on October 29

From a technical perspective, the overall trend is still within the high-level consolidation range, and the high point has not broken through the previous high point of around 2758, so it is still treated as a continuation of the rise.In other words, the trend still has the potential to retrace to the support level of the lower boundary of the triangle drawn yesterday. Currently, the central position of the upward continuation is around 2740. From a time perspective, there is a series of significant risk events ahead, making it difficult for the trend to establish a solid direction in the short term, and the amplitude may not necessarily represent strength. Therefore, it is necessary to be more cautious.