On Wednesday (October 21, Beijing time), spot gold traded around $4,116.80 per ounce, with prices continuing to be under pressure as concerns about Middle East geopolitical risk premiums resurfaced. Investors weighed the possibility of further interest rate hikes this year ahead of the Federal Reserve's policy meeting next week. US crude oil traded around $98.29 per barrel, after hitting a five-month high on Tuesday. The market was focused on the meeting between the Iranian president and the Pakistani army chief of staff, as well as news of Houthi attacks on Saudi infrastructure and attacks on ships in the Gulf. Meanwhile, the Iranian defense minister stated that they were prepared for a fourth round of war.

Key Focus Today

stock market

U.S. stocks closed mixed on Tuesday: the Dow Jones Industrial Average rose 1.02% to close at 52,495.88; the S&P 500 rose 0.28% to close at 7,712.57; and the Nasdaq Composite fell 0.02% to close at 26,424.82. The healthcare sector led the S&P 500 gains, hitting a record high. Eli Lilly contributed the most to the S&P 500's gains, while UnitedHealth Group, Merck, Johnson & Johnson, and Amgen also boosted the Dow. The technology sector dipped slightly by 0.3%, remaining the biggest drag on the S&P 500. The communications services sector fell 0.9% due to declines in Netflix (1.7%), Meta (1.6%), and Alphabet (1%). The energy sector lagged behind, with oil prices retreating after hitting a five-month high. Traders focused on the meeting between the Iranian president and the Pakistani army chief of staff, Houthi attacks on Saudi infrastructure, and reports of attacks on ships in the Gulf region. Investors remain skeptical about AI transactions and the monetization capabilities of some companies, with funds rotating into small-cap stocks and healthcare sectors. The S&P 500 Value Index rose 0.9%, the Growth Index fell 0.2%, the Russell 2000 rose 1.7%, financial services rose 1%, real estate rose 1.7%, and utilities rose 1.2%. In individual stocks, General Motors fell 6.8% due to pressure from rising commodity costs and declining truck sales in the coming months; 3M rose 5.8% due to expanding its data center partnership with Amazon, issuing warrants to Amazon subsidiaries to purchase more than $521 million of 3M common stock, and raising its full-year profit forecast; SpaceX rose 4% after hours on much better-than-expected third-quarter earnings, while Netflix fell 6% after hours on weaker-than-expected fourth-quarter earnings forecasts.

Gold Market

Spot gold fell 0.37% on Tuesday to settle at $4,125.08 an ounce, as investors weighed the possibility of further interest rate hikes this year ahead of the Federal Reserve's policy meeting next week. Bob Haberkorn, senior market strategist at StoneX, said that inflation and the Fed's interest rate policy are the main factors currently suppressing gold prices. US Treasuries currently appear more attractive as a safe-haven asset than gold. $4,000 is a crucial level to watch closely; whether it can hold will largely depend on the Fed's stance. The Federal Reserve raised interest rates by 25 basis points in September, its first this year. Recent comments from officials suggest a lack of urgency to further tighten policy, lowering market expectations for a rate hike at the October 27-28 meeting. However, the CME Group's FedWatch tool shows traders expect a 92% probability of a December rate hike. Investors are also watching next week's release of the U.S. Personal Consumption Expenditures (PCE) price index to assess whether inflationary pressures persist and their impact on the interest rate outlook.

oil market

Oil prices retreated on Tuesday after hitting a five-month high. WTI crude fell 0.06% to settle at $98.18 a barrel, after hitting a five-month high of $101.37 during the session. Brent crude fell 0.11% to settle at $109.07 a barrel, after hitting a five-month high of $111.95 during the session. Traders focused on a meeting between the Iranian president and the Pakistani army chief of staff, as well as reports of Houthi attacks on Saudi infrastructure and attacks on Gulf vessels. Iranian President Peshizian met with Pakistani Army Chief of Staff Munir in Tehran on Tuesday to discuss mediation efforts and regional developments. Pakistan's mediation efforts had led to a provisional peace agreement in June, but it collapsed weeks later with renewed fighting between Iran and the United States. Yemen's pro-Iranian Houthi rebels claimed on Monday that they had launched multiple attacks on Saudi energy, airport, and military targets, including Saudi Aramco facilities in Yanbu, the Shahba oil field, King Khalid International Airport in Riyadh, and Abha Airport. Saudi authorities did not immediately confirm this. ING analysts said oil prices remained strongly supported, given that the volatile situation indicated the market had already priced in a significant risk premium; ship tracking company Kpler reported on Monday that at least 18 ships had been attacked in two weeks, maintaining this risk premium.

Foreign exchange market

The dollar index fell 0.28% on Tuesday to settle at $101.709 a barrel, dragged down by lower oil prices and longer-term U.S. Treasury yields. Traders were weighing the impact of escalating tensions between the U.S. and Iran over the Iran war, and whether the trend of large capital inflows into U.S. artificial intelligence stocks could continue. Oil prices retreated after hitting a five-month high, with traders focused on the meeting between the Iranian president and the Pakistani army chief of staff, as well as reports of ongoing Houthi attacks on Saudi infrastructure and attacks on Gulf vessels. Rising oil prices exacerbated concerns that inflation will remain high for an extended period. The dollar jumped last week after US consumer price inflation accelerated in September, but this was quickly overshadowed by concerns about artificial intelligence. Dominic Bunning, head of G10 FX strategy at Nomura Securities, said that rising energy prices are beneficial to the dollar, but if interest rates rise too high to cause AI trading to crash, the previously favorable effect on the dollar could suddenly turn unfavorable. The market is currently hovering around this critical point. Shares of South Korean AI service company Elie Group plummeted 32% on its first day of trading on the Seoul Stock Exchange, reigniting market concerns about AI earlier on Tuesday. The euro rose 0.22% against the dollar to $1.1235, but concerns surrounding France, facing large-scale protests and a deteriorating fiscal situation, with the government announcing on Tuesday that it would deploy additional troops to support police and prepare for a large-scale security operation for a new round of protests on Saturday, weighed on the market. Handelsbanken strategists said that concerns about France are unlikely to subside in the short term, and the market has not yet fully priced in the possibility of further euro weakness. The pound rose 0.59% against the dollar to $1.338 after resilient labor market data. eToro strategists said the risk lies in the fact that the resilient labor market gives the Bank of England room and justification for another rate hike, with data showing the market has almost fully priced in a 25 basis point rate hike on November 5. The dollar fell 0.2% against the yen to 158.16 as record demand hit a longer-term Japanese government bond auction. State Street strategists said the record demand for 20-year bonds indicates that sidelined funds are starting to return, and Japanese bonds are becoming a relative safe haven amid political and fiscal turmoil in Europe, particularly in France. The Canadian dollar rose 0.34% against the dollar to $1.406, its highest in nearly a month, after Alberta's first independence referendum saw residents overwhelmingly vote to remain in Canada.

International News

US Officials: US Presidential Envoy to Meet with Putin on October 21 On October 20, local time, US officials revealed that US Presidential Envoy Witkov will meet with Russian President Putin on October 21, with Trump's son-in-law Jared Kushner participating via video. The US stated that previous discussions with Ukraine and Europe concerned a comprehensive peace framework, including security guarantees. Ukraine put forward new ideas and suggestions, which were discussed in detail by all parties. Currently, the US, Ukraine, and Europe have reached a high degree of consensus on the next steps at the working level. The US aims to further discuss relevant proposals with Russia based on the progress made with Ukraine and Europe. (CCTV News) Iranian President: Negotiations Prerequisite is US Lifting of Pressure, Threats, and Sanctions On October 20, local time, Iranian President Pezechzian, during a meeting with Pakistani Army Chief of Staff Munir, stated that all problems in the region, from escalating tensions and conflicts to the chaos in the Strait of Hormuz, are caused by US aggression. The US cannot simultaneously increase sanctions and pressure on Iran, blockade it, while claiming to engage in dialogue and negotiations. Iran has been and continues to be willing to engage in dialogue, but the United States must first lift its threats and sanctions before any dialogue can take place. If they truly seek dialogue and an agreement, then their current actions completely contradict their statements and are illogical. Pezzichian emphasized that the United States absolutely cannot achieve its goals through war; it will only cause destruction and loss, not only for Iran but for the entire region, which is something Iran absolutely does not want to see. (CCTV News) The United States is deploying its third aircraft carrier and approximately 10,000 military personnel to the Middle East. The United States is deploying its third aircraft carrier and approximately 10,000 military personnel to the Middle East. Two US officials stated that the USS Theodore Roosevelt carrier strike group and the 13th Marine Expeditionary Unit are expected to arrive by the end of November. The Roosevelt will join the USS George H.W. Bush, which deployed in April, and the USS George Washington, which arrived in August to replace the USS Abraham Lincoln. The USS Theodore Roosevelt departed San Diego on Sunday, September 27, while the 13th Marine Expeditionary Unit set sail the following day aboard the USS Makin Island amphibious ready group. The carrier strike group carries approximately 6,000 sailors, while the Marine Expeditionary Unit and amphibious ready group together comprise about 4,200 personnel. Iranian Official: All Enriched Nuclear Material Will Remain in Iran On September 20, local time, Rezaei, Secretary of Iran's Supreme National Security Council, emphasized during a meeting with Pakistani Army Chief of Staff Mohammad Munir that all enriched nuclear material will remain in Iran. He stated that this material is a valuable asset of the Iranian people and will be used domestically. Rezaei said that the entire Iranian people and officials unanimously agree that no negotiations will take place until the US establishes trust. The first step in establishing trust is to meet the conditions proposed by Iran. Mohammad Munir emphasized the news of the reopening of the Iranian-Pakistani border. He stated that the border issue between Iran and Pakistan has been resolved, and the border reopened that morning. (CCTV News) Trump Nearly Approved a Strikes Against Iran Sources revealed that the Trump administration nearly approved a military strike against Iran at least once recently. Trump promised not to launch any new strikes before November 3, but Iranian officials said they expect the US bombing operations to eventually resume. Iran's Defense Minister Says Iran Prepares for a Fourth Round of War On October 19, Iran's new Defense Minister, Mehdad Ahraki, stated that Iran is preparing for a fourth round of war. On the same day, Iranian Islamic Revolutionary Guard Corps spokesman Mohbi stated that seven major undersea fiber optic cables pass through the Strait of Hormuz, on which global internet and commercial data depend, and that "Iran reminds its enemies that they need to know this information." (CCTV International News) The probability of a Fed rate hike in October is 16.1%, and the probability of at least one more rate hike this year is 90.2%. According to CME's "FedWatch": the probability of the Fed maintaining interest rates unchanged by October is 83.9%, and the probability of a cumulative rate hike of 25 basis points is 16.1%. The probability of the Federal Reserve keeping interest rates unchanged by December is 9.8%, the probability of a cumulative rate hike of 25 basis points is 76.1%, and the probability of a cumulative rate hike of 50 basis points is 14.2%.

Domestic News

The Ministry of Industry and Information Technology (MIIT) reported that China's equipment manufacturing industry saw a 7.1% year-on-year increase in added value in the first three quarters , according to a press conference held by the State Council Information Office on October 20. The conference highlighted the industry's positive development trend, continuous improvement in quality and efficiency, and its overall performance can be summarized as "stable, innovative, and intelligent." First, the scale remained stable, with the equipment manufacturing industry's role as a "ballast stone" continuing to be consolidated. In the first three quarters, the added value of the equipment manufacturing industry increased by 7.1% year-on-year, contributing 26.6% to industrial growth. The supply capacity of high-end equipment strengthened, with the output of industrial robots, CNC machine tools, and new energy vehicles increasing by 29.1%, 13.5%, and 11% year-on-year, respectively. The national shipbuilding completion volume increased by 50.7% year-on-year. Second, the products were innovative, with numerous highlights. The first fully-equipped intelligent digital subway train debuted at the ISM Mall of Asia in Berlin in September, marking a new milestone in urban rail transit equipment. Intelligent robots transformed into shop assistants, making coffee and selling goods, accelerating the application of artificial intelligence in everyday life. China's second domestically built large cruise ship, the "Aida Huacheng," is nearing completion and delivery. Construction began on the world's largest 271,000-cubic-meter LNG carrier in my country. New car products from 25 brands under 16 Chinese automakers were showcased at the recently concluded Paris Motor Show. Thirdly, manufacturing is becoming increasingly intelligent, with production models undergoing rapid restructuring. The "Artificial Intelligence + Manufacturing" special action has been implemented in depth, achieving breakthroughs in my country's self-developed AI-powered direct-drive CNC machine tools, with overall machine performance improved by 30% to 60% compared to national standards. More than 13,000 advanced-level and over 500 excellent-level intelligent factories have been built, and 15 leading-level intelligent factories have been cultivated. Enterprises are accelerating the exploration of future manufacturing models such as shared manufacturing for construction machinery, island-style manufacturing for automobiles, and agile customization for home appliances. (CCTV)