China’s PBOC Intervened Ordering Banks to Sell Dollars to Strengthen Renminbi

U.S. equity futures traded higher in late premarket this European afternoon after closing lower yesterday. The Dow Jones dropped by more than 400 points in the previous session, while the Nasdaq gave up over 300 points. For the week, the Dow still modestly added 1.15%, while the S&P 500 declined around 1.6%. The Empire State manufacturing index for October is scheduled for release at the market open. The gauge is expected to decline to minus 2.5 for the reported period, compared to a reading of minus 1.5 in September.

Earningswise, Bank of America Corp (BAC) yesterday after the close reported a smaller-than-expected 9% drop in quarterly profit, as its interest income was bolstered by a string of rate hikes that helped offset weakness in its investment banking division. The U.S. Federal Reserve's aggressive move to tighten monetary policy to whisk sticky inflation enabled U.S. banks to obtain more room to raise their prime lending rates, driving a revival in their interest income, which for years was stagnant due to near-zero rates.

European markets are trading higher today. As of 3:30 p.m. CET, the Pan-European Stoxx Europe 600 Index rose 1.52%, the British FTSE 100 advanced 0.88% while the French CAC 40 Index gained 1.49%, and the German DAX climbed 1.64%. The pound Sterling staged a swift recovery as investors speculated that Prime Minister Liz Truss’s administration will further backtrack from the expansive fiscal strategy that plunged markets into turmoil last month. Meanwhile, incumbent Chancellor of the Exchequer Jeremy Hunt said income tax cuts the government had previously planned would be indefinitely suspended. He also reversed plans to slash dividend tax rates and scrap alcohol duties.

Asian markets traded mixed today. Japan’s Nikkei 225 fell 1.16%, while Australia’s S&P/ASX 200 fell 1.4%. However, China’s Composite Index rose 0.42%, Hong Kong’s Hang Seng Index gained 0.15% and India’s BSE Sensex rose 0.8%.

The People Bank of China maintained the interest rate unchanged for the second consecutive month. China Statistics Bureau will delay the release of Q3 GDP data scheduled for Tuesday. Also, according to Reuters, China's state banks doubled down their intervention to defend a weakening yuan earlier today, with banks having reportedly sold a high volume of U.S. dollars and used a combination of swaps and spot trades.