Morning wrap (18.10.2023)

• Chinese GDP came in higher than expected at 4.9% on an annualized basis vs. 4.5% expected and 6.3% previously. On a quarterly basis, growth was 1.3% vs. 0.9% expected and 0.8% previously. The unemployment rate was 5% lower than the 5.2% forecast and 5.2% previously.
• China's urban investment growth was 3.1% vs. 3.2% forecast and 3.2% previously. Industrial production came in at 4.5% m/m, 0.1% higher than analysts expected. Retail sales, however, were much higher than expected at 5.5% vs. 4.9% forecast and 4.6% previously
• The HangSeng Index ended the Asian session unchanged after the release of important macro data. We also saw limited volatility on the KOSPI, Topix and Nikkei - these 3 indices ended the session from 0 to 0.3% higher.
• Following the tragedy at the Al Ahli hospital in the Gaza Strip, where hundreds of civilians were killed by a rocket blast, we are seeing an escalation in the Middle East. The IDF indicates that Jihad militants are responsible for the attack
• Russia and the United Arab Emirates have requested an urgent meeting of the UN Security Council later today, following the Al Ahli hospital tragedy
• Following President Erdogan's comments condemning the attack on the hospital, Israel has ordered the evacuation of all its citizens from Turkish territory
• Two U.S. officials reported that the U.S. military thwarted an attack on U.S. troops in Iraq using unidirectional drones
• At the same time, Hezbollah according to a terrorist communiqué planned a day of unprecedented anger against Israel and Biden's visit, which was eventually canceled by the US.
• According to Axios, the White House is discussing the possibility of using military force if Hezbollah joins the Gaza war and attacks Israel with its huge arsenal of rockets.
• Yesterday's U.S. API crude oil inventory data showed a massive decline of 4.38 million barrels, compared to a very strong increase of 12.94 million barrels the previous week. The market was expecting a nearly 3.5 times smaller drop in inventories of 1.26 million barrels
• As a result of the escalation and the API reading, oil gains 0.7% today and is back to $91.5 per barrel (brent), but the VIX is only 1% higher - still below $19.
• European index futures are mostly trading lower. EU50 loses nearly 0.25%
• Bitcoin gains slightly and is trading at $28,700. Other cryptocurrecnies volatility is for now much lower

Oil prices are 10% higher after the escalation of the Gaza conflict since October 6, and are climbing constantly since then. Source: xStation5