A look at the day ahead in U.S. and global markets from Mike

Dolan

Wall St stocks roared back on Tuesday just as China doubts

re-emerge - but a scattergun week now has investors navigating

the impact from a potentially devastating hurricane in Florida

and a recoiling oil price in the face of Middle East tensions.

Adding to this heavy and sometimes conflicting newsflow, the

U.S. Justice Department late Tuesday said it may ask a judge to

force Alphabet's Google to divest parts of its

business, such as its Chrome browser and Android operating

system - claiming they sustain an illegal monopoly in online

search.

Despite the breakup call, Alphabet's stock was steady in

Frankfurt on Wednesday - but the antitrust move may be

serve as a shot across the bow to Big Tech megacaps that once

again led Tuesday's broader rally. Stock index futures

were marginally in the red ahead of today's open.

The moves paled in comparison to the wild swings in China's

markets , where growing doubts about the success

of last month's slightly frantic economic stimulus measures saw

the biggest one-day losses in mainland indexes there since the

pandemic in 2020.

Stocks in Shanghai and the blue-chip CSI300

closed down 6.6% and 7.1% respectively on Wednesday -

snapping a 10-day winning streak. Hong Kong added another

2% fall to its near 10% slide on Tuesday.

Clearly jarred by the sudden about face on markets, China's

finance ministry said it will detail plans on a fiscal stimulus

to boost the economy at a news conference on Saturday. But the

market fizz has certainly disappeared after the original

announcements.

Despite U.S. hurricane fears and trepidation about what

happens next between Israel and Iran, murmurs of ceasefire

between Israel and Hezbollah in Lebanon and fresh the Chinese

demand doubts saw oil prices fall back sharply on Tuesday - as

crude clocked its biggest one-day drop of the year.

That's helped defuse anxiety about another energy price hit

to the global disinflation process, with rates traders now

focussed on Thursday's release of the September U.S. consumer

price report.

U.S. crude steadied on Wednesday just under $74 per barrel

after a 4.5% slump in the previous session. Annual oil price

moves continue to clock losses of about 14% year-on-year.

Goldman Sachs analysts reckon the oil market risk premia

they look at had dissipated considerably, with options markets

pricing in a roughly 5% probability of a $20/bbl price jump.

Goldman reckons that sort of price jump roughly corresponds

to a 2 million barrels per day 6-month interruption without an

OPEC offset, occurring within the next month.

With $39 billion of 10-year Treasury notes under the hammer

later, 10-year yields fell back slightly today but continued to

cling to a new-found 4% handle. The dollar remained

pumped up and nudged higher to build on last week's surge.

The Federal Reserve on Wednesday releases minutes of its

September policy meeting - where it began cutting interest rates

with an outsize half point cut. But much of the thinking since

then has changed due last week's robust employment report.

The short-term economic effects of Category 5 Hurricane

Milton - which is due to make landfall on Wednesday and has

already displaced more than million people from coastal areas -

are harder to assess.

Disruptions to economic data over the next month from this

and the most recent hurricane Helene are likely at least.

Airlines, energy firms and a Universal Studios theme park

were among the companies beginning to halt their Florida

operations as they braced for the huge storm.

Whatever the hit, the strength of the economy more broadly

looks able to absorb it.

After the latest jobs and trade numbers, the Atlanta Fed's

real-time 'GDPNow' estimate was again revised up sharply to 3.2%

for the current quarter.

With less than a month to go before the U.S. election,

fiscal jitters are also starting to re-emerge in bond markets.

The Congressional Budget Office estimated on Tuesday a U.S.

federal deficit of $1.834 trillion for fiscal 2024, the highest

in the post-COVID era, as debt interest costs jumped sharply and

outlays rose for Social Security, Medicare and health insurance

tax credits.

Neither candidate in the election has plans to rein that

deficit in and Republican Donald Trump's plans are expected to

see twice the deterioration to the budget than that of Democrat

Kamala Harris.

Elsewhere, the once-hawkish New Zealand central bank

announced its second interest rate cut of the year - a hefty

half point reduction with promise of more to come. The kiwi

dollar fell after the decision.

Key developments that should provide more direction to U.S.

markets later on Wednesday:

* Mexico September inflation

* Federal Reserve releases minutes of Sept policymaking meeting

* Fed Vice Chair Philip Jefferson, San Francisco Fed President

Mary Daly, Dallas Fed boss Lorie Logan, Boston Fed chief Susan

Collins, Richmond Fed chief Thomas Barkin, Chicago Fed chief

Austan Goolsbee and Atlanta Fed chief Raphael Bostic all speak

* US corporate earnings: CostCo

* US Treasury auctions $39 billion of 10-year notes

(By Mike Dolan; Editing by Toby Chopra

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