October 5, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Nov 1st 2023

  • Probability of a 0bps hike → 78%
  • Probability of a 25bps hike → 22%

The News Room

Hong Kong Stock Exchange Launches Blockchain-Based Settlement Platform

The Hong Kong Stock Exchange is leveraging blockchain technology to upgrade its Stock Connect system, facilitating connections between its stock markets and mainland China's. The revamped system, named Synapse, will employ smart contracts to streamline post-trade workflows and mitigate settlement risk, ensuring timely and concurrent settlement instructions and status updates to all parties involved in a trade.

Notably, the Stock Connect's average daily turnover reached $15.302 billion in the first half of 2023, marking a 5% year-on-year increase. This upgrade, expected to launch on October 9, echoes global moves towards integrating blockchain in financial systems, as evidenced by recommendations for Australia’s ASX to adopt the technology for its settlement system, CHESS.

FTX Employees Knew About the Backdoor to Alameda Months Before Collapse: WSJ

A Wall Street Journal report indicates that certain U.S.-based FTX employees were aware of a backdoor in the exchange that enabled Alameda Research to withdraw billions in customer funds and had raised concerns that went unaddressed. The issue was identified by employees from LedgerX, a crypto derivatives exchange acquired by FTX in 2021. Despite raising the backdoor issue with FTX's director of engineering, Nishad Singh, the problem was not resolved. Julie Schoening, LedgerX's chief risk officer, was dismissed in August 2022 after bringing attention to the concerns. The revelations surface amidst FTX founder Sam Bankman-Fried's trial in New York on charges of wire fraud, to which he has pleaded not guilty. Singh, who has pleaded guilty, is anticipated to testify against Bankman-Fried.

Hong Kong Crypto Firm Launches $100 Million Fund Aimed at Asia Startups

Venture capital firm CMCC Global has successfully raised $100 million in funding for its new venture, the Titan Fund, which is dedicated to supporting blockchain startups across Asia. Notable investors backing the initiative include Winklevoss Capital, Animoca Brands founder Yat Siu, Block.one, Pacific Century Group, and Jebsen Capital. The Titan Fund is poised to channel investments into three pivotal domains: blockchain infrastructure, consumer applications, and cryptocurrency financial services.

Martin Baumann, co-founder of CMCC Global, emphasized the prospective rise of web3 entrepreneurial ventures in Hong Kong, positioning the Titan Fund as a primary capital source. This move aligns with Hong Kong's recent efforts to reestablish its foothold in the crypto arena, particularly after granting licenses to HashKey Exchange and OSL for retail crypto trading services.

Trading Desk Insights

U.S. stock futures faced downward pressure on Thursday, with market participants keenly awaiting tomorrow's pivotal employment figures.

The latest weekly initial jobless claims, concluding on Sept. 30, clocked in at 207,000 missing estimates of 210,000. Despite this, the uptick failed to satisfy certain investors who were anticipating signs of labor market weakening, in hopes of stalling the ongoing surge in interest rates that's been dampening equities.

However, equities found some support following a pullback in Treasury yields. Notably, the 10-year Treasury note yield retreated from levels unseen since 2007 after payroll specialists ADP reported a lackluster private-sector job growth of 89,000 for September, considerably trailing the projected 160,000. This has somewhat pacified investors, suggesting a potential easing in the job market.

On the commodities front, crude oil futures are teetering on the edge, poised for their gloomiest week since March, with WTI plunging 7.6%. Should this trend persist until Friday, it could echo the ominous week of March 17, witnessing a staggering 13% fall in WTI Crude. As a crucial inflation determinant, the trajectory of energy costs remains under scrutiny.

Bitcoin has managed to outshine equities since mid-September by 18%. The cryptocurrency arena is finally basking in some bullish tailwinds after a protracted spell of bearish undertones. This contrasts with the equities landscape, currently riddled with ambiguities surrounding future interest rate trajectories. As of this morning's stock market open, BTCUSDT advanced 1.5% but later recoiled to 27,500. Prices remain within an intraday trend channel and are trying to break above the previous session highs. As long as we trade above 26,700, we’re expecting to slowly grind higher.

Conversely, ETHBTC is on a downward spiral, marking its lowest level since July 2022. The anticipated surge from the recent ETH futures ETF failed to materialize, as the inflow was trivial. The current market sentiment seems to be veering away from high-risk assets. Although certain altcoins have recently surged, the durability of these movements is questionable. These digital assets have been exhibiting volatility with numerous deceptive rallies. This trading landscape is filled with opportunities, but risk management is of utmost importance.

Technical Charts


This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.

Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.

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