On Tuesday (October 20, Beijing time) in early Asian trading, spot gold was trading around $4,135.69 per ounce, pressured by a stronger dollar and high US Treasury yields. Investors awaited the Federal Reserve's interest rate decision next week, with policymakers expected to keep rates unchanged. US crude oil was trading around $98.27 per ounce, after hitting a one-month high on Monday following attacks by pro-Iranian Houthi rebels on a military training camp in Yemen and further attacks on Saudi energy, airports, and military facilities, while Russian diesel had not yet been released to the market.

Key Focus Today

stock market

U.S. stocks rose on Monday, with the S&P 500 gaining 0.41% to 7690.73, the Nasdaq rising 1.11% to 26430.89, and the Dow Jones Industrial Average falling 0.07% to 51966.03. The gains were largely driven by heavyweight stocks, with major indexes retreating from their intraday highs. Volatile oil prices dampened some of the support previously provided by the energy market. Investors returned to chip and other AI-related stocks after last week's sharp sell-off, while awaiting key corporate earnings reports. Market concerns that rising interest rates could dampen investment in AI infrastructure and increasing focus on how to finance expensive AI development led to a 1.6% gain in the Philadelphia Semiconductor Index on Monday, ending an eight-day losing streak that had previously fallen by about 15.7%, marking its longest losing streak since October 2008. Michael James of Rosenblatt stated that the semiconductor sector had reached a "bottomless" turning point, with no new bad news over the weekend, pessimistic sentiment, and severe overselling leading to the rebound. However, with a large number of technology companies about to release their earnings reports, the market is "far from out of the woods." Seven of the eleven sectors in the S&P 500 closed lower. The consumer discretionary sector led the gains with a 2.7% increase, followed by the technology sector with a 1.2% rise. Utilities fell 2%, and real estate dropped 1.2%, leading the declines. Amazon rose 5% after Morgan Stanley listed it as a "top pick," while Tesla rose 3.8%. CoreWeave, which plunged over 25% last week due to concerns about $50 billion in debt, closed down 0.4% despite Goldman Sachs upgrading it to "buy." Intel rose 2.4% after JPMorgan Chase upgraded it to "neutral." Monday also marked the 39th anniversary of Black Monday.

Gold Market

Spot gold fell 0.59% on Monday to settle at $4,140.64 an ounce, pressured by a stronger dollar and high U.S. Treasury yields as investors awaited the Federal Reserve’s interest rate decision next week, with policymakers expected to keep rates unchanged. Forex analyst Fawad Razakzada stated that market concerns about central banks having to further tighten policies to control inflation are providing new upward momentum for yields. With yields remaining high, gold investors are weighing whether holding bonds is more prudent. Razakzada added that the key is not only whether the Federal Reserve raises rates next week or waits until December, but also the tone of its policy guidance; hawkish information could lead to further weakness in gold prices in the short term. The CME FedWatch tool shows that traders believe there is an 82.8% chance the Fed will keep rates unchanged in October and a 90% chance of a rate hike in December. Gold is typically seen as a hedge against inflation, but rising interest rates will diminish the appeal of this non-yielding asset. Investors are also awaiting next week's US Personal Consumption Expenditures (PCE) data. Ole Hansen, head of commodity strategy at Saxo Bank, stated that the key resistance level remains $4235, while support continues to form below $4100.

oil market

Oil prices hit a one-month high on Monday. WTI crude fell 0.81% to settle at $98.24 a barrel, but touched a one-month high of $99.71 during the session. Brent crude fell 0.43% to settle at $109.19 a barrel, after hitting a one-month high of $110.66 during the session, following an attack by pro-Iranian Houthi rebels on a Yemeni military training camp and further attacks on Saudi energy facilities, airports, and military installations. The Houthi rebels claimed responsibility for attacks on Saudi Aramco facilities in Yanbu, the Shayba oil field, King Khalid International Airport in Riyadh, and Abha Airport, though Saudi authorities did not immediately confirm. Iranian media reported that the Iranian Revolutionary Guard stated on Sunday that an oil tanker caught fire and exploded after striking a mine in the southern Strait of Hormuz. Analysis firm Kpler stated that crude oil flows in the region fell to an average of about 8.5 million barrels per day last week due to increased threats to commercial shipping, compared to over 20 million barrels per day the previous week, with at least 10 confirmed incidents involving merchant ships occurring during the week. Furthermore, surveys showed that OPEC crude oil production increased in September, primarily driven by increased output from Saudi Arabia and Iraq.

Foreign exchange market

The dollar index held steady around 102 on Monday, boosted by a rebound in artificial intelligence-related stocks after last week's sharp sell-off. Last week, concerns that waning investor enthusiasm for AI stocks would hinder capital inflows and reduce dollar demand weighed on the dollar. Francesco Pesole, a foreign exchange strategist at ING, said the market seems to have developed a clear reaction pattern: even with high inflation, stock market volatility is enough to significantly weaken expectations of further tightening by the Federal Reserve. This logic may be related to the wealth effect in the stock market, which many believe underpins the resilience of the US economy. This suggests that if stock market volatility stems from the technology and artificial intelligence sectors, the dollar will no longer be the preferred safe-haven currency and may even lag behind many other G10 currencies. Recent comments from Federal Reserve officials, including those by Fed Chairman Warsh, suggest policymakers are in no hurry to raise interest rates again. Warsh expressed optimism about the strong performance of the US economy last Friday but did not hint at whether further rate hikes were needed or when they might occur. Federal funds rate futures traders expect the Fed to keep rates unchanged at its October 27-28 meeting and believe there is a 91% chance of a rate hike in December. The euro fell 0.24% against the dollar, closing at 1.1211. The French riots exacerbated market concerns about its deteriorating fiscal outlook, while a rebound in artificial intelligence stocks boosted the dollar. The French central government ordered curfews in some local governments on Monday, and nationwide anti-government protests over the weekend sparked riots and looting. The central government is under pressure due to inadequate security measures. The unrest is also seen as increasing the likelihood of National Rally leader Marine Le Pen winning next year's presidential election, potentially raising questions about France's continued membership in the European Union. Marc Chandler, chief market strategist at Bannockburn Global Forex, stated that Le Pen is effectively running on a fiscal austerity platform but holds an anti-EU stance. The spread between French government bond yields and safe-haven German bonds has widened to 147 basis points, reaching levels seen during the 2011-2012 European debt crisis, compared to approximately 110 basis points at the end of September. Canadian annual inflation rose to 3.1% in September, slightly below economists' expectations, causing the Canadian dollar to give back some gains. However, hawkish comments from Bank of Canada Governor Macklem on Saturday kept the dollar strong. He stated that due to persistently high oil and petroleum product prices, the central bank expects to significantly raise its quarterly inflation forecast in October. The Canadian dollar rose 0.27% against the US dollar to 1.41. Meanwhile, oil-rich Alberta held a non-binding referendum on Monday regarding whether the western province should secede from Canada. The yen fell 0.35% against the US dollar to 158.49 yen. Bank of Japan Governor Ueda Kazuo stated on Monday that core inflation was "very close" to the central bank's 2% target, and strong global demand for artificial intelligence exacerbated inflationary pressures from a tight labor market, suggesting there is still room for further interest rate hikes.

International News

US Energy Secretary Wright: Russian Diesel Not Yet on the Market US Energy Secretary Wright stated that Russian diesel has not yet been released to the market. Wright indicated that whether Russia will release diesel to the market remains to be seen, and the US hopes that Russia will indeed release diesel; for Russia to export diesel and continue to do so, the situation in Ukraine must change. Cuba's New Oil and Gas Regulations Officially Take Effect, Expanding Participation for Private Enterprises and Foreign Investors On October 19th local time, new regulations for Cuba's oil and gas industry officially took effect, further expanding the scope of participation for domestic private enterprises and foreign investors in the oil and gas industry, providing a legal basis for expanding oil and gas resource development. The new regulations include Cuban Decree No. 135, "Oil and Gas," and its accompanying Implementing Decree No. 184, published in the Cuban Official Gazette on October 12th. According to the new regulations, Cuba further relaxes entry restrictions in the oil and gas industry, allowing qualified domestic and foreign enterprises and individuals to participate in activities such as oil and gas exploration, extraction, refining, transportation, storage, and sales. However, related business activities still require legal permits, and Cuba's underground oil and gas resources remain the property of the entire nation. The state retains the right of first refusal to purchase oil and gas necessary for energy security. (CCTV News) Israeli Prime Minister Orders Overthrow of Iranian Regime On the evening of October 19th local time, Israeli Prime Minister Benjamin Netanyahu stated in an interview with Israel's Channel 14 television that he had issued orders to the Israeli military, the Mossad, and the military intelligence agency to "overthrow the Iranian regime." Netanyahu, citing previous public support from US President Trump, stated that Trump's attitude was "very clear," namely that the current "core task is to completely eliminate the existential threat posed by Iran to Israel." (CCTV International News) Partial Curfews Implemented in Several Municipalities Including Paris, France The French Prime Minister's Office announced that, with the consent of the relevant mayors, four municipalities in the northern department of France will implement partial curfews on Monday and Tuesday, from 8 PM to 6 AM the following morning. The municipalities under curfew include Lille, Douai, Denan, and Vatini. The government of the northern French prefectures stated that the relevant measures are still in the final stages of finalization, and the curfew will cover parts of these towns. Subsequently, the Paris Police Headquarters announced that a curfew would be implemented in some areas of Paris from 11 PM Monday to 6 AM Tuesday. In addition, demonstrations will be prohibited in some areas of Paris from 8 PM Monday to 6 AM Tuesday. (CCTV News) The New York Stock Exchange extends trading hours for some options involving securities such as Nvidia and Alibaba. The New York Stock Exchange (NYSE) has extended trading hours for some NYSE American options. The first batch of eligible underlying securities includes the State Street SPDR S&P 500 ETF Trust, the iShares Russell 2000 ETF, the SPDR Gold Trust, and companies such as Apple, Microsoft, Nvidia, Alibaba, TSMC, Alphabet, Amazon, and Oracle. The morning trading session is from 7:30 AM to 9:25 AM Eastern Time, and the closing trading session is from 4:00 PM to 4:15 PM Eastern Time. The NYSE plans to expand similar extended trading hours to stock trading in December. "Extended options trading hours reflect market demand, allowing investors to seize investment opportunities and manage risk reliably over a longer period," said Kevin Tyrrell, Chief Product Officer of the NYSE. On the 19th local time, Iranian Foreign Minister Araghchi and visiting Russian Foreign Minister Lavrov held a press conference. Araghchi stated that Iran-Russia relations are of strategic significance, and that bilateral relations have reached a new level since the implementation of the comprehensive strategic agreement. During Lavrov's visit, the two sides discussed regional and international developments. In the area of bilateral relations, they explored practical solutions to expand political, cultural, and economic ties. Lavrov stated that bilateral trade has significantly increased through the joint committee and cooperation between the public and private sectors. Despite the challenging international situation, Russia has no intention of revising its investment agreement with Iran, and the deployment of the Russian technical team at Iran's Bushehr nuclear power plant is resuming. (CCTV News) The probability of the Federal Reserve raising interest rates in October is 17.2%, and the probability of at least one more rate hike this year is 93.6%. According to CME's "FedWatch": the probability of the Fed keeping interest rates unchanged by October is 82.8%, and the probability of a cumulative rate hike of 25 basis points is 17.2%. The probability of the Fed keeping interest rates unchanged by December is 6.4%, the probability of a cumulative rate hike of 25 basis points is 77.8%, and the probability of a cumulative rate hike of 50 basis points is 15.8%.

Domestic News

Orders for high-speed optical module components are booked until the end of 2027; the value of a single piece of glass has increased more than 60 times . At an optical component company in Nanchang, Jiangxi Province, a seemingly insignificant piece of glass is entering the high-speed optical communication market as AI computing power demands grow. From 2.5G PON filters for fiber-to-the-home (FTTH) to 1.6T optical module products, its value has increased more than 60 times in 11 years, from a penny to over 60 times its original value. With the rapid construction of AI large-scale models and computing centers, 5nm and 10nm high-precision coating products are ushering in a broad market. Currently, the company's traditional imaging and optical communication business ratio has been optimized from 8:2 to 5:5. In the first half of this year, revenue from communication optics business increased by 118.25%, almost achieving last year's full-year profit six months ahead of schedule. Their high-speed optical module component orders are booked until the end of 2027. (CCTV Finance) The total value of imports and exports of goods increased by 18.8% year-on-year in the first three quarters of this year. On October 19, the State Council Information Office held a press conference, and the National Bureau of Statistics released economic data for the first three quarters of this year. In the first three quarters, the total value of China's imports and exports reached 39,939.9 billion yuan, a year-on-year increase of 18.8%. Exports totaled 23,197.9 billion yuan, up 16.4%, while imports reached 16,742 billion yuan, up 22.3%. Imports and exports with countries participating in the Belt and Road Initiative increased by 17.1%. Private enterprises' imports and exports increased by 19.1%, accounting for 56.9% of the total. Exports of machinery and electronic products increased by 23.7%, accounting for 64.3% of total exports. In September, the total value of imports and exports reached 5,162.8 billion yuan, a year-on-year increase of 27.5%, 7.7 percentage points higher than the previous month. Exports totaled 3,034.4 billion yuan, up 29.6%, while imports reached 2,128.4 billion yuan, up 24.6%. (CCTV News)