Futures Jump After Blowout TSMC Earnings And Ahead Of ECB Rate Cut

Futures are higher and on the verge of another all time high with Tech leading: NVDA is up +2.5% pre-market as TSMC reported strong upside on margin, along with comments on “extremely robust AI related demand”. As of 8:00am, S&P futures rose 0.4% to 5,910, just shy of the 5,918 all time high; Nasdaq 100 futures climbed 0.9%, led by an advance in chip stocks after TSMC posted a better-than-projected 54% rise in quarterly earnings. That helped reverse the impact of ASML Holding NV’s lowered 2025 guidance, which halted a rally that had pushed US-traded shares to a three-month high. Europe’s Stoxx 600 index gained 0.7% ahead of . China stocks extended their post-euphoria slump and erased gains on disappointment over the outcome of a joint ministry press briefing about the property market which again lacked critical details on the stimulus package. Iron ore tumbled to a three-week low ahead of data on Friday which is expected to show the economy grew at its weakest pace in six quarters. Bond yields are higher and USD is lower; 10-year yields are 2bp higher to 4.03%. Commodities are mixed: Oil and base metals are higher, while precious metals are lower.(Click on image to enlarge)In premarket trading, chip giant Taiwan Semiconductor jumped 8.5% after it gave a strong forecast and touted the sustainability of AI hardware demand as strong sales of Nvidia AI chips offset a sagging mobile industry. Margins were seen as a highlight, and the report helped to ease recent concerns about the chip space that followed ASML’s results. The company also raised its target for 2024 revenue growth. US chip were broadly higher on the report. Expedia shares jumped 6.7% after the Financial Times reported that Uber Technologies explored a possible bid for the online travel-booking company. Analysts were positive about a deal noting that Dara Khosrowshahi led Expedia for 12 years before taking the helm at Uber in 2017. CSX shares dropped 3.9% after the freight-transportation company reported third-quarter earnings per share and revenue that missed consensus estimates. Analysts flagged the impact of hurricane activity on the results. Here are some other notable premarket movers:

“TSMC earnings were clearly a positive and that has allayed some of the worries around the chip sector after that dismal report from ASML,” said Michael Brown, strategist at Pepperstone Group Ltd. “The outlook for risk remains very positive particularly as central banks across both developed markets continue to remove policy restriction at a pretty rapid pace.”The European Central Bank’s policy decision is due later, where it’s expected to cut its benchmark rate by another quarter-point to 3.25% (our ). Shortly after, the market will turn its attention to US retail sales and jobless figures for further evidence that the US consumer and labor market remain healthy, as investors seek confirmation of soft-landing bets. Traders also await results from tech bellwether Netflix which is set to report its third-quarter earnings after the close amid some concern its breakneck rally may be running out of steam. In Europe, major markets are higher (Stoxx 600 +0.3%, UKX +0.2%, DAX +0.8%) ahead of the ECB’s second consecutive rate cut with banks leading gains after Nordea increased its outlook for the full year and outlined a new program of share buybacks, while mining and real estate stocks lagged. France and Italy markets outperformed while and Spain lagged. Thematically, Macro Recovery, French Exporters and Italian Banks are among the top outperformers, while Momentum sLong are lagging. ECB is expected to announce the second 25bp rate cut today. Here are the biggest movers Thursday:

Earlier in the session, Asian equities fell, on pace for its longest stretch of losses in nearly five months, as a rally in Chinese stocks faltered. The MSCI Asia Pacific Index declined as much as 0.4%. Tencent, Keyence and Tokyo Electron contributed the most to the index’s fourth-straight day of decline. Shares also fell in Japan and India, while they rose in Taiwan and Australia. Chinese stocks in mainland slid into correction territory, while those in Hong Kong fell more than 1%, as investors were underwhelmed by the property sector support measures announced at a government briefing. The country pledged to nearly double the loan quota for unfinished residential projects to 4 trillion yuan ($562 billion), which fell short of market expectations. A Bloomberg Intelligence gauge of Chinese developer stocks tumbled more than 12%.In rates, treasuries are slightly cheaper across the curve in a mild bear-steepening move, similar to price action in European rates ahead of the European Central Bank’s monetary policy decision at 8:15am New York time. It’s expected to cut the deposit rate for a third time this cycle, to 3.25%, and President Christine Lagarde holds a presser thirty minutes later. US yields are higher by less than 2bp with long-end leading losses, leaving 2s10s and 5s30s spreads steeper by less than 1bp. 10-year around 4.03% is up 1.8bp from Wednesday’s close, keeping pace with bunds while gilts outperform by ~1bp. Bunds fall ahead of the European Central Bank decision although did trim losses after euro-area inflation was revised lower. German 10-year yields rise 3bps to 2.21%. US session has packed economic data slate including jobless claims and retail sales.In FX,  the Bloomberg Dollar Spot Index halted gains as markets awaited key data including jobless claims and remarks by Federal Reserve Bank of Chicago President Austan Goolsbee. The euro extended losses ahead of the European Central Bank policy meeting. The Aussie dollar is the strongest of the G-10 currencies, rising 0.2% against the greenback after stronger-than-expected jobs data.In commodities basic resources underperform after Chinese stocks slid into a correction following another underwhelming policy briefing. Iron ore tumbled to a three-week low following China’s latest moves to shore up the property market, underscoring skepticism they will be enough to boost construction activity and steel demand. Oil prices advance, with WTI rising 0.3% to $70.60 a barrel after four days of declines, as traders weighed potential risks to production in the Middle East. Spot gold rises $4 having earlier hit a record high, as the increasingly tight presidential race drives demand for haven assets.Looking at today’s calendar, US economic data calendar includes September retail sales, October Philadelphia Fed business outlook and weekly jobless claims (8:30am), September industrial production (9:15am), August business inventories, October NAHB housing market index (10am) and August TIC flows (4pm). Fed’s Goolsbee is scheduled to speak at 11am. Market Snapshot

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A more detailed look at global markets courtesy of NewsquawkAPAC stocks were mostly in the green following the rebound of equity markets stateside but with gains capped amid quiet macro catalysts and as China’s property sector briefing failed to rally local developers. ASX 200 climbed to a fresh record high led by strength in real estate, industrials and financials, while strong jobs data added to the upbeat mood but further lowered the odds of a rate cut this year. Nikkei 225 underperformed following disappointing trade data including a surprise contraction in exports. Hang Seng and Shanghai Comp advanced at the open with the help of tech strength and consumer-related stocks, although the mainland index briefly wiped out all of its gains amid weakness in property stocks as the press briefing by several Chinese government agencies and the PBoC failed to inspire a turnaround in the sector.Top Asian News

European bourses, Stoxx 600 (+0.4%) began the session modestly firmer and gradually edged to session highs as the morning progressed before coming off best levels. Sentiment across European futures improved following the release of TSMC’s earnings, with tech opening in the green but then faltering. European sectors hold a slight positive bias; Banks take the top spot, lifted by post-earning strength in Nordea Bank (+3.5%). The Basic Resources sector is found towards the bottom of the pile, hampered by broader weakness in the base metals complex. US Equity Futures (ES +0.3%, NQ +0.6%, RTY +0.2%) are modestly firmer across the board, ahead of key US data which includes US Initial Jobless Claims, Philly Fed Index, Retail Sales and Industrial Production. Earnings include: Nestle (revenue & guidance soft), Nokia (missed, maintained outlook), Pernod Ricard (Miss, China sales -26%). EU is weighing using Elon Musk’s empire revenue as a potential fine for X, according to Bloomberg sources; Tesla (TSLA) would be exempt as it is a publicly-traded company.Top European News

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DB’s Jim Reid concludes the overnight wrapMarkets put in a solid performance yesterday, with investors remaining upbeat as they digested several earnings results and another modest decline in oil prices. This backdrop proved very supportive for risk assets, meaning that the S&P 500 (+0.47%) advanced to its second-highest ever closing level, whilst US IG spreads remained at their tightest since June 2021. Investors even grew more relaxed about inflation thanks to the decline in commodity prices and a downside surprise in the UK CPI release, which helped sovereign bonds to rally on both sides of the Atlantic. So it was a strong day overall, even as a few concerns remain in the background, not least around geopolitical tensions in the Middle East.When it comes to the next 24 hours, central banks will be back in the spotlight today, as the ECB is widely expected to deliver another 25bp rate cut, taking their deposit rate down to 3.25%. Bear in mind that as recently as mid-September, markets were expecting that the ECB would probably stay on hold at this meeting, having only done quarterly cuts so far in June and September. But since then, we’ve had a weak batch of data, with the Euro Area composite PMI in contractionary territory for the first time in 7 months, whilst inflation has also continued to fall. In fact, Euro Area headline inflation was down to +1.8% in September, which is the first time it’s been beneath the ECB’s 2% target in over three years. So the backdrop has turned a lot more dovish in recent weeks.DB’s economists also expect the ECB to cut by 25bps today, and they write that this would signal a pivot towards faster easing, as it would be the first back-to-back cut of the cycle. But given the high level of macro uncertainty, they don’t expect the ECB to move away from the ‘data dependent, meeting by meeting’ approach to policy. For more info, see their full preview here.Ahead of the ECB’s decision, sovereign bonds rallied on both sides of the Atlantic. In part, that was because of the UK CPI print for September, which came in beneath expectations and helped to reassure investors about inflationary pressures, not least after Canada’s inflation data also surprised on the downside on Tuesday. The release showed UK headline inflation was down to +1.7% (vs. +1.9% expected), which is its lowest since April 2021. And even though core inflation was stronger at +3.2% (vs. +3.4% expected), that was also its weakest in three years.That downside surprise in UK inflation led investors to dial up their expectations for Bank of England rate cuts. Indeed, overnight index swaps for the June 2025 meeting were pricing in 114bps of rate cuts by the close, up +9.8ps on the previous day. That pattern was echoed more broadly as well, with expectations for ECB cuts by June up +4.1bps on the day to 137bps. And over in the US, there were now 121bps cuts priced by June, up +2.8bps on the day. So that offered fresh momentum to sovereign bonds, which was also supported by the latest declines in commodity prices. So by the close, it meant that yields on 10yr gilts (-9.7bps) had seen a sharp decline, whilst those on 10yr bunds (-3.8bps), OATs (-3.4bps) and BTPs (-5.2bps) all moved lower as well.Over in the US, the decline in yields was smaller, with those on 10yr Treasuries down -2.0bps to 4.01%. But in the meantime, we did get a fresh indication that the recent pickup in US yields has been filtering through to mortgages, with data from the Mortgage Bankers Association showing that the 30yr fixed rate was up to 6.52% in the week ending October 11, having been at 6.14% just a couple of weeks earlier. Moreover, that decline yesterday has since pulled back overnight, with the 10yr Treasury yield up +1.8bps this morning again to 4.03%.When it came to equities, there were solid gains in the US which saw the S&P 500 rise +0.47%, leaving it less than -0.3% beneath its record high from Monday. The key theme was a rotation towards small-cap stocks, with the Russell 2000 (+1.64%) reaching its highest level since November 2021. A few other segments also did very well, with the KBW Bank Index (+1.71%) reaching its highest level since March 2022, and Morgan Stanley (+6.50%) was the strongest performer in the index after its earnings release. On the other hand, the megacap tech stocks underperformed, with the Magnificent 7 (+0.01%) little changed despite a +3.13% gain for Nvidia, amidst losses for Meta (-1.62%), Apple (-0.89%) and Microsoft (-0.63%).In terms of the geopolitical situation, investors are still following the Middle East closely, including what form any retaliation from Israel might take against Iran. But in the meantime, oil prices continued to fall back modestly yesterday, with Brent crude (-0.04%) losing ground for a fourth consecutive day to end the session at $74.22/bbl.Overnight in Asia, there’s been a mixed performance across the major equity indices, and US equity futures are also pointing lower this morning, with those on the S&P 500 down -0.23%. Initially, Chinese equities had posted strong gains overnight, with the CSI 300 up +1.32% at its intraday peak, but it’s since pared those back to only be up +0.08% at time of writing. That followed the news that China would almost double its loan quota for so-called “white-list” property projects, up to 4 trillion yuan, but this fell short of some expectations, and the CSI 300 Real Estate Index is down -4.95% this morning.Elsewhere in the region, Australian government bond yields have risen after the country’s employment report for September was stronger than expected. It showed the unemployment rate falling to 4.1% (vs. 4.2% expected), while employment was up by +64.1k (vs. +25.0k expected), coming in above every economist’s estimate on Bloomberg. That’s seen investors dial back the likelihood of a near-term rate cut by the RBA, with the probability of a rate cut by the December meeting down to 36% overnight, from 49% at yesterday’s close.Finally in Japan, the Nikkei has fallen by -0.65% this morning, which follows data showing that Japan’s exports were down -1.7% year-on-year in September. That’s the biggest decline since February 2021, and it fell short of estimates for a +0.9% gain.To the day ahead now, and the main highlight will be the ECB’s policy decision, along with President Lagarde’s subsequent press conference. We’ll also hear from the Fed’s Goolsbee. Data releases from the US include retail sales, industrial production and capacity utilisation for September, the weekly initial jobless claims, and the NAHB’s housing market index for October. Finally, earnings releases include Netflix.More By This Author:WTI Rallies After API Reports Across-The-Board Inventory DrawsStagflation Odds Jump In Latest NY Fed Survey As Inflation Expectations RiseGoldman Q3 Profit Jumps 45% On Surge In Equity-Trading Revenue As Earnings Beat Across The Board