On Thursday (October 23, Beijing time) in early Asian trading, spot gold was trading around $4,127 per ounce. Gold prices rebounded slightly on Wednesday as US Treasury yields fell and investors awaited next week's Federal Reserve meeting. US crude oil was trading around $98 per barrel. US crude oil touched above $100 per barrel again on Wednesday. Investors were weighing potential progress in the Russia-Ukraine negotiations on one hand, and focusing on declining US crude oil inventories on the other, as well as the stalled US-Iran dialogue on the other.

Key Focus Today

stock market

U.S. stocks closed higher on Wednesday, with the Dow Jones Industrial Average rising 0.69% to 52,856.09, the S&P 500 gaining 0.58% to 7,757.17, and the Nasdaq Composite climbing 1.05% to 26,702.86, leading the gains among the three major indexes. Meta rose 3% in after-hours trading, Tesla closed up 3.4% and then rose another 1.6% in after-hours trading, SpaceX reported its first profit since its IPO, with its stock closing up 7.8%, and Advanced Micro Devices (AMD) surged 9.6% on better-than-expected revenue and profit margin outlooks, boosting AI-related and chip stocks. The S&P 500 Information Technology Index rose 1.6%, and the Philadelphia Semiconductor Index rose 2%, easing some investor concerns about AI investment and profitability. However, the communications services sector fell 1.3%, AT&T fell 6.5% despite better-than-expected earnings, Netflix fell 5.3%, and Alphabet fell 1.6%, limiting the overall market gains.

Gold Market

Spot gold rose 0.39% on Wednesday to settle at $4,141.10 an ounce, as lower U.S. Treasury yields reduced the opportunity cost of holding non-yielding gold, while investors awaited next week's Federal Reserve meeting. The market is focused on the FOMC meeting on October 27-28 and next week's US PCE report. Zaner Metals strategist Peter Grant stated that the market expects a 25 basis point rate hike this year, possibly not until December. The probability of an October rate hike has significantly decreased, and gold prices may maintain range-bound trading in the short term, but the overall trend remains downward. CME FedWatch shows an 88% probability of a December rate hike, and a survey of almost all economists predicts the Fed will keep rates unchanged this month and raise rates in December.

oil market

Oil prices closed mixed on Wednesday. WTI crude fell 0.48% to settle at $97.71 a barrel, but touched above $100 a barrel again during the session. Brent crude rose 0.58% to settle at $109.71 a barrel. Investors weighed the potential progress in the Russia-Ukraine negotiations on one hand, and focused on the decline in U.S. crude inventories on the other and the stalled U.S.-Iran dialogue on the other. The Kremlin stated that Putin has agreed to resume US-brokered peace talks with Ukraine as early as next month. Dennis Kissler of BOK Financial noted that recent US-Russia negotiations have been a negative factor for oil prices, as a peace agreement could alleviate global diesel supply shortages, a major driver of price increases in recent weeks. Iranian Foreign Minister Araqchi stated that Iran is fully prepared for self-defense, and Iranian President Pezechzian stated that the US cannot expect dialogue with Iran given its blockade and threats. Kpler data shows at least 18 ship attacks recorded in the past two weeks. Analysts warn that Iranian attacks on oil tankers extend far beyond the Strait of Hormuz into the Gulf of Oman, jeopardizing crude oil loading and ship-to-ship transshipment in the Gulf region. The Houthi rebels claimed responsibility on Monday for attacks on Saudi Aramco's Yanbu facility, the Iba oil field, and airports in Riyadh and Abha. The US Department of Energy stated on Wednesday that the Trump administration proposed lending nearly one-third of the US's 1 million barrels of emergency heating oil reserves to curb soaring oil prices caused by diesel shortages due to the war between Iran and Ukraine. EIA data showed that U.S. crude oil inventories fell by 3.06 million barrels to 412.5 million barrels last week, while analysts expected a decrease of 820,000 barrels. Distillate fuel inventories, including diesel and heating oil, rose by 1.68 million barrels to 104.3 million barrels during the week, while the market expected a decrease of 1.16 million barrels.

Foreign exchange market

The dollar index held steady around 101.69 on Wednesday as traders weighed the renewed inflation risks triggered by rising oil prices and awaited next week's Federal Reserve meeting. Scotiabank's chief foreign exchange strategist, Shaun Osborne, stated that the market currently lacks a dominant theme, a situation expected to persist at least until next week's FOMC meeting. The market needs to understand the Fed's thinking. The ongoing conflict between the US and Iran has heightened market concerns that rising oil prices could drive up inflation and impact Fed policy. Federal funds rate traders believe a rate hike next week is unlikely, anticipating the next hike in December. Fed Chairman Warsh is also unlikely to signal future policy direction. Investors are also concerned about the sustainability of the AI boom. Despite accelerating US consumer inflation in September, the dollar weakened last week. The market believes the AI boom continues to attract capital inflows to the US, boosting economic growth and inflation expectations, thus providing long-term support for the dollar. Noah Buffam of CIBC stated that US economic growth is largely driven by AI trading, keeping US inflation consistently above target levels and having a far greater impact on the US economy than on other countries. The euro edged lower against the dollar, closing at 1.1231, pressured by anti-government protests in France and a deteriorating fiscal outlook. The yield on French 10-year bonds rose to its highest level in 24 years. John Hardy of Saxo stated that France's debt situation is difficult to resolve and requires appropriate fiscal adjustments. Macron pledged to prevent a repeat of last weekend's riots and looting, and the "Yellow Vest" movement plans a large-scale march in Paris on Saturday. The Australian dollar rose 0.36% against the dollar, closing at 0.7027, a near one-month high. Reserve Bank of Australia Deputy Governor Hauser stated that the inflation outlook had "significantly deteriorated." The pound rose 0.1% against the dollar to 1.3392, as stronger-than-expected UK inflation last month increased the likelihood of a Bank of England rate hike in November, pushing the pound to a 17-month high against the euro. The dollar edged lower against the yen, closing at 158.13. Bank of Japan Deputy Governor Ryozo Himino stated that core inflation is close to the 2% target and financial conditions remain loose, indicating that there is still room for borrowing costs to rise.

International News

Zelensky: Ukraine Supports Early Launch of New Round of Trilateral Talks Ukrainian President Volodymyr Zelensky stated on the 21st that Russia has agreed to hold a new round of trilateral talks with the US, Ukraine, and Russia. The US proposed launching the talks as soon as possible, which Ukraine supports, with all parties aiming to hold a meeting in early November or earlier. Zelensky stated that Ukraine supports several peace initiatives, including a comprehensive ceasefire, a cessation of attacks on energy infrastructure, humanitarian operations, and the repatriation of prisoners of war, and insists on promoting de-escalation through diplomatic means. However, he also expressed caution regarding the prospects of the talks. (CCTV News) US Prepares to Order Evacuation of Some Embassy Staff in Gulf Countries US officials stated that the US State Department is preparing to issue instructions to evacuate some staff members and their families from embassies in the Gulf region. This move is due to the potential for renewed hostilities, particularly the conflict with the pro-Iranian Houthi rebels in Yemen. Dozens of Israeli warplanes approached the Iranian border. On the evening of October 21, local time, Israel's Channel 12 television, citing US officials, reported that earlier this week, "dozens of Israeli fighter jets and refueling aircraft flew over Syria and Iraq, approaching the Iranian border, their flight paths 'highly similar' to attack routes targeting Iran." The report, citing US sources, stated that the US suspected the Israeli move was "intended to provoke Iran." The report stated that the Israeli warplanes "turned back to Israel before entering Iranian airspace." Israel informed the US before the operation, stating that it was "a military exercise and a show of force," "aimed at deterring Iran." However, the report also pointed out that relevant sources believed that "some Israeli officials were actually attempting to entice Iran to fire on Israeli warplanes, thereby providing Israel with a pretext for a military strike against Iran." The report added that Israeli security services are concerned that recent extremely tough rhetoric against Iran by Israeli Prime Minister Netanyahu and Defense Minister Katz may prompt Iran to launch a "preemptive strike" against Israel. (CCTV International News) US Imposes New Round of Sanctions on Iran On October 21, local time, the US Treasury Department announced a new round of sanctions against Iran. The Treasury Department issued a statement saying that as part of its "economic isolation campaign," it imposed sanctions on law firms headquartered in Panama and Greece. The statement claimed that these firms had supported Iran's illicit shipping activities for years, indirectly helping Tehran generate revenue and "funding Iran's military, weapons, and nuclear programs." The statement also noted that the US Treasury Department sanctioned shipping agencies headquartered in Singapore and the United Arab Emirates, stating that these agencies directly assisted the operation of Iran's "shadow fleet." The statement added that the actions also targeted a number of cargo ships that generated revenue for Iran. (CCTV News) UK Public Debt Surpasses £3 Trillion for the First Time Data released by the UK Office for National Statistics on the 21st showed that, affected by factors such as increased government spending and rising debt interest rates, the UK's net public sector borrowing in September exceeded expectations, with total net public sector debt surpassing £3 trillion (approximately 26.8 trillion yuan) for the first time, further increasing the fiscal pressure on the UK government. Data showed that the UK's net public sector borrowing in September was £24.5 billion, an increase of £1.8 billion compared to the same period last year, representing a growth rate of 7.7%, and £1.9 billion higher than the previous forecast by the UK Office for Budget Responsibility. As of the end of September, the cumulative net public sector debt reached £3.005 trillion, equivalent to 94.0% of GDP, a high level not seen since the early 1960s. (Xinhua News Agency) US Mission to Saudi Arabia: Hostile Actions Against Saudi Arabia May Escalate Rapidly The US Mission to Saudi Arabia issued a security alert on the 21st, stating that the Houthi rebels in Yemen are continuing hostile actions against Saudi Arabia, attacking civilian airports and other critical infrastructure, causing civilian casualties and severely disrupting travel. "These hostile actions could escalate rapidly and spread." The mission stated that U.S. citizens should heed nationwide alerts issued by the Saudi Civil Defense via mobile phones. Given the recent spate of attacks on Saudi airports, U.S. government personnel in Saudi Arabia must obtain special authorization from the mission head to use any airport within the country. The mission reminded U.S. citizens to be aware of potential risks such as airport attacks, airspace closures, flight cancellations, and travel disruptions. "If you choose to use an airport within Saudi Arabia, please exercise extreme caution." (Xinhua) The probability of a Federal Reserve rate hike in October is 16.1%, and the probability of at least one more rate hike this year is 90.1%. 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 25 basis point rate hike is 16.1%. The probability of the Fed maintaining interest rates unchanged by December is 9.9%, the probability of a cumulative 25 basis point rate hike is 76.0%, and the probability of a cumulative 50 basis point rate hike is 14.2%.

Domestic News

The General Offices of the CPC Central Committee and the State Council issued an opinion on promoting the deep integration of technological innovation and industrial innovation. The opinion proposes to improve the market environment that incentivizes innovation. It calls for removing unreasonable institutional barriers that restrict innovative products from entering the market, conducting pilot programs to relax market access in new business models and fields, and exploring the implementation of a commitment-based entry system. It also emphasizes strengthening the supervision of new technology applications and exploring "sandbox regulation" methods. Furthermore, it calls for improving laws and regulations in cutting-edge fields such as artificial intelligence and biotechnology, and perfecting the norms of scientific and technological ethics. (Xinhua) The General Offices of the CPC Central Committee and the State Council also issued an opinion on comprehensively implementing the "Artificial Intelligence+" action to promote the all-round empowerment of various industries by artificial intelligence . The opinion proposes to transform and upgrade traditional industries with advanced technologies. It calls for deepening the implementation of major technological transformation and upgrading projects and large-scale equipment renewal projects in the manufacturing industry, accelerating the innovative development of the industrial internet, promoting the deep integration of the digital economy and the real economy, and promoting the intelligent, green, and integrated development of the manufacturing industry. Finally, it calls for strengthening scientific research in seed industry, agricultural machinery equipment, and other fields, and accelerating the promotion and application of agricultural scientific and technological achievements. We will build a comprehensive technology service system covering the entire industry chain to promote the high-quality and efficient development of the technology service industry. We will fully implement the "Artificial Intelligence+" initiative to drive the all-round empowerment of artificial intelligence across all sectors. (Xinhua News Agency)