Mid-session market 10/24: China political volatility, banker becomes UK Prime Minister

The global economic market experienced a volatile weekend. In China, investors generally reacted strongly to former Chinese President Hu Jintao (Hồ Cẩm Đào) being escorted out of the Party Congress live on television in a turning point demonstrating Xi Jinping's (Tập Cận Bình) power consolidation before continuing in his third term. Stocks on the domestic market fell nearly 7% with NASDAQ GDC dropping to -16% just this morning.

Meanwhile also in Asia, Bank of Japan carried out the largest currency market intervention in history, pulling the Yen to rally 1.7% on Friday, selling an estimated $50 billion in one day. However, the Yen immediately reversed and dropped -1.2% today.

Meanwhile in Europe, the situation appears more stable after Rishi Sunak, former economy minister, becomes the next Prime Minister of the UK. He is the first ethnic minority Prime Minister in UK history (of Indian origin) and was a banker at Goldman Sachs and partner at hedge fund CIFM.

With foreigners withdrawing more than $2.5 billion from Chinese stocks in one day, US stocks nearly become the preferred destination, reacting positively to the political stabilization in the UK after the FED announced it will reconsider the rate hike process on Friday. Futures pushed in the overnight session last night before being taken profit at SPX~3800 early morning. However, the market found support above the volatility trigger point 3725 with fairly stable sentiment showing clear selective buying in big tech and health care with Tesla sold off this morning after price cuts in the Chinese market.

On the macro front, U.S. S&P PMI Manufacturing fell in October, hitting 49.9 vs 51 forecast, Services sector also fell to 46.6 vs 49.5 expected while the composite index to 47.3 vs 49.3 forecast. All indicating the global economy continues to shift in a negative direction and officially enters recessionary growth territory (quarterly annualized change below 0%)

On internals, the market shows no bullish signs contrary to the index change. Volume quite balanced in 1-1 state with $TICK neutral indicating most of today's buying force is sector rotation from international to domestic stocks with 3800~SPX continuing as current resistance however the pull from put options at the lower end has decreased significantly. With current internals, most stocks will be pinned below SPX~3800 in the second half of the trading session.