Markets Fall, Bonds and Gold Rise, Oil Market, Corporate and Geopolitical News
Stock market news
• Markets face a tough road ahead in the final stretch before the US election, with bonds turning volatile and gold signalling that at least some investors are gearing up to buy. While gold has hit record highs, a combination of strong US economic data, the so-called "Trump trade" and a renewed focus on the fiscal outlook has sent 10-year yields to three-month highs.
• The yield on long-term US government bonds has increased. The 10-year bond now yields 4.2% per annum. This helped the dollar to rise in price and stopped the growth of gold. Silver, by inertia, grew by another 2%. On the stock market, NVDA shares were noted for their growth by 4%.
• Despite a sell-off in government bonds and European sovereigns on Monday, US bond yields are rising faster than their global peers and boosting markets as strong US labour market data makes traders lose confidence in a Federal Reserve rate cut. Since data released earlier this month showed an unexpected surge in US hiring, gilts and federal bonds have shown higher momentum across the curve, selling far less than Treasuries. The 10-year spread between Treasuries and bunds is now the widest since July, and the UST-gilts spread turned positive last week. Volatility is already showing signs of cooling in primary debt markets, which have slowed significantly in places like Australia.
• Goldman Sachs believes a strong US economy and a dovish central bank approach in Europe will widen spreads, with a target of 205 basis points for the gap between German bunds and Treasuries, and said elections and fundamentals are in focus.
• Corporate earnings pick up steam. A short calendar of economic releases — save for the U.S. jobs report on Nov. 1 — has investors on the fence ahead of Election Day on Nov. 5. Republican candidate Donald Trump is seen as a bond bear because his tax, tariff and immigration policies are likely to be inflationary — though Democrat Kamala Harris is also likely to spend big. Corporate earnings, especially where companies can describe economic conditions, could also draw attention.
• Trading in Asia was rather sluggish, with most markets in decline.
• Gas prices in Europe are rising amid tensions in the Middle East. Risks of escalation of the conflict in the region add instability, but high reserves and increased supplies are holding back further price growth for now.
• China's central bank announced cuts in two key interest rates to stimulate the economy. The one-year LPR was cut to 3.1% from 3.35% and the five-year LPR was cut to 3.6% from 3.85%.
• AI search engine Perplexity plans to raise $1 billion at a valuation of up to $8 billion - FT. Perplexity's backers include Nvidia, Jeff Bezos, OpenAI co-founder Andrej Karpathy and Meta chief scientist Yann LeCun.
• Apple announced that iOS 18.1 with AI features will be released next week. The update will partially include Apple Intelligence - we are expecting such functions as text generation and object removal from photos. In addition, Apple will open access to the NFC chip for third-party analogues of Apple Pay for the first time.
• The decade of rapid growth of the S&P500 is over - Goldman Sachs strategist. We expect the index to grow at a rate of 3% per year over the next decade.
• Apollo's Slock sees rising odds of Fed leaving rates unchanged in November The chances that Fed officials will leave interest rates unchanged in November are rising as the U.S. economy picks up steam, according to Torsten Slock, head of Apollo.
• Honeywell (HON) is partnering with Google (GOOG) to integrate data with generative AI. The partnership will combine Google's Gemini and Honeywell's industrial data collected through the Forge platform.
• Disney (DIS) board to announce Bob Iger's successor in early 2026: 'Critical priority' Disney said it will announce its next CEO in early 2026 and named former Morgan Stanley CEO James Gorman as its new chairman.
• Wall Street links Cigna-Humana mega-merger to Trump victory. The prospects for a potential merger between health insurers Cigna Group and Humana Inc. depend on the upcoming US presidential election, analysts say.
• The U.S. Supreme Court has rejected a petition to allow the president to fire agency heads. The Supreme Court has declined to hear an appeal that sought to give the president control over agencies that have long operated independently, including the Federal Trade Commission and the Securities and Exchange Commission.
• Danish shipping group Maersk on Monday raised its full-year profit, revenue and cash flow forecasts for 2024.
• Metals rise after Chinese banks cut rates to help the property market. Industrial metals including copper and zinc rose.
• JPMorgan data show growing demand for the dollar as the U.S. election approaches. That buying is likely to continue, JPMorgan strategists said, citing their own metrics.
• German carmakers should not fear competition from China, said Chancellor Olaf Scholz, describing the investment in the first Mercedes-Benz battery recycling plant as part of Germany's new industrial policy.
• Henley & Partners' 2024 Crypto Wealth Report is out. The number of BTC millionaires has grown by 111% since 2023, reaching 85,400, accounting for 49.6% of all crypto millionaires.
• Tether (USDT) reached a record market cap of $120 billion on October 20, 2024.
• The UAE Central Bank has approved the launch of the country’s first regulated stablecoin, AE Coin, pegged to the dirham.
• Boeing is offering a 35 percent pay raise over four years to compensate for ending the strike, but the question of pension coverage remains open.
• Cigna has resumed merger talks with Humana, Bloomberg reported.
• CVS Health is once again at the center of Wall Street turmoil after its CEO was fired.
• IBM releases new AI models for enterprises.
• Starboard has acquired a stake in consumer health care products maker Kenvue, Reuters reported.
• Metlife is in talks to buy PineBridge's assets in China for $1 billion to $1.5 billion, according to Bloomberg.
• Activist fund Elliott and Southwest Airlines will begin settlement talks, Bloomberg reported.
• AT&T ratifies agreement with striking CWA union.
• Ally Financial Inc.: Raymond James shares upgraded to market perform from underperform.
• Essex Property Trust, Inc.: Raymond James downgraded to "meet market" from "outperform."
• Extra Space Storage Inc.: Wells Fargo downgrades shares to equal weight from overweight with $175 price target.
• Mohawk Industries, Inc.: Baird upgraded stock rating to outperform from neutral, price target raised to $196 from $160.
• Old Dominion Freight Line, Inc.: Stifel downgrades rating to hold from buy and cuts price target to $197 from $209.
• Prologis, Inc.: Goldman Sachs downgrades stock rating to neutral from buy and price target to $132 from $142.
• Saia, Inc.: Stifel downgrades rating to hold from buy and cuts price target to $437 from $440.
• United Parcel Service, Inc.: Barclays downgrades shares to Underweight from Equal Weight with $120 price target.
• Comerica Incorporated: Citigroup maintains neutral rating, price target raised to $63 from $51.
• Elf Beauty, Inc.: Baird maintains Overweight rating and cuts price target to $175 from $240.
• IBM: Jefferies maintains position unchanged, price target raised to $245 from $200.
• McDonald's Corporation: Wells Fargo maintains its Overweight rating and raises its price target to $350 from $285.
• Mohawk Industries, Inc.: Baird shares are upgraded from Neutral to Outperform and the price target is raised from $160 to $196.
• Sharkninja, Inc.: Goldman Sachs maintains Buy rating and raises price target to $123 from $102.
• Snap Inc.: Morgan Stanley maintains its market weight recommendation and cuts price target to $10 from $16.
• Ensign Group, Inc.: RBC Capital maintains its Outperform rating and raises its price target to $167 from $133.
• The Travelers Companies, Inc.: Roth Capital maintains a Buy rating and raises price target to $300 from $240.
• Intertek Group Plc: RBC Capital downgrades shares to Outperform from Outperform and cuts price target to GBX 5000 from GBX 5200.
• M&G Plc: Barclays upgrades shares to equal weight from underweight and price target rises to £2.30 from £2.20.
• Wizz Air Holdings Plc: Goodbody stock rating downgraded to hold from buy, price target cut to £13.10 from £19.35.
• Santander launches digital bank in US to get cheaper auto loan financing
• India's Bajaj Housing Finance reports rise in second-quarter profit on robust demand for home loans.
• Chinese insurance company Ping An Insurance reported a 36.1% rise in nine-month profit.
• Sandy Spring for $1.6 billion in preparation for regional bank deals.
• European banks are under pressure from investors to maintain profit growth.
• Germany denies reports it is considering legislation to protect banks from foreign takeovers.
• India's HDB Financial to raise up to $1.5 billion in IPO
• The CFO of India's HDFC Bank said that in 2-3 years the loan-to-deposit ratio will reach the level.
• India's central bank lifts restrictions on non-banking unit of JM Financial.
• Regions Financial's quarterly profit falls on weak interest income.
• Meta releases an AI model that can test the performance of other AI models.
• Honeywell partners with Google to integrate data with generative AI.
• Sophos acquires Secureworks for $859 million to expand cybersecurity portfolio.
• Brevan Howard claims that a significant portion of his crypto trading is conducted from the UAE.
• Santander launches digital bank in US to cut car loan costs
• Enterprise software maker Genesys is confidentially filing for an IPO in the U.S.
• Musk to answer questions about Tesla robotaxi bets on results day.
• EU teams up with venture capital firms to boost region's tech sector
• Italian tech company Bending Spoons has set its sights on the US for a potential IPO.
• Polish software company TTMS plans to use IPO proceeds to fuel acquisitions
• Oil prices fall more than 7% as new data from China showed economic growth slowing and investors weighed the ongoing conflict in the Middle East following the death of Hamas leader Yahya Sinwar.
• China's economy grew at its slowest pace since early 2023 in the third quarter, as the property sector remains a drag.
• Meanwhile, output at China's oil refineries fell for a sixth straight month, while electric vehicle sales rose 42% in August to a record high of more than 1 million vehicles.
• U.S. oil and gas producers are cutting the number of drilling rigs operating for the fourth time in five weeks, energy services company Baker Hughes said.
• The rig count fell by one to 585 and is down 4% this year. However, crude oil production hit a record high in the week to Oct. 11 at 13.5 million barrels a day as operators became more efficient.
• Oil production in the Permian Basin, the largest US oil field, could get a new boost as a new natural gas pipeline removes bottlenecks that have been causing producers to sell their product at a loss, reports Georgina McCartney.
• The Matterhorn pipeline came on line last month and can transport up to 2.5 billion cubic feet of gas per day, adding about 14% new capacity.
• Much of the expected growth in Permian oil production in 2025 won't happen without more natural gas extraction capacity, said David Sedusky, an analyst at Energy Aspects. He forecasts an additional 350,000 barrels a day of production will come on stream next year.
• Finally, earnings season is here, and SLB kicks it off on Friday. The oilfield services giant reported a 13% jump in third-quarter profit but warned of slower revenue growth in the fourth quarter as producers tighten budgets.
• Cuba's power grid collapsed for the fourth time in 48 hours on Sunday as an approaching hurricane threatened to cause further damage to the island's fragile infrastructure. Millions of people were left without power for more than two days after the initial grid collapse.
• Cheniere Energy is one step closer to producing its first liquefied natural gas from its expansion project in Corpus Christi, Texas, after federal regulators granted the go-ahead for the supply line to begin operations, reports Curtis Williams.
• Canadian companies can request temporary tariff exemptions on Chinese imports of electric vehicles, steel and aluminum products, the country's finance ministry said Friday, a measure intended to help companies adjust their supply chains to cope with the new duties.
• Mexican oil company Pemex has slowed spending at its exploration and production unit to save more than $1 billion, Adriana Barrera reports. The heavily indebted company will prioritize investments in high-yielding wells, the document said.
• The United States will provide about $2 billion in grants to protect its aging electric grid from the threat of extreme weather. The funding will go to 32 projects across the U.S. and will include strengthening about 950 miles of transmission lines.
• Randstad and aerospace and defense firm Saab report in Europe on Tuesday. U.S. companies reporting include Texas Instruments, 3M, General Motors, Freeport-McMoRan, Lockheed Martin, General Electric and Verizon.
Key events that could impact markets on Tuesday:
- IMF annual meetings
- Earnings: Randstad, Saab, Texas Instruments, General Motors, General Electric, Freeport McMoRan, Lockheed Martin, Verizon, Philip Morris, Kimberly-Clark
Fundamental news
• The US leading economic indicators index fell more than expected.
By 0.5% versus expectations of a 0.3% fall.
Foreign banks raise their forecasts for China's GDP growth amid stimulus measures.
UBS raises its forecast from 4.6% to 4.8%.
Goldman Sachs raises its forecast to 4.95%.
Industrial prices in Germany fell by 1.4% .
A 1.1% fall was expected.
This is what a recession looks like.
• US Secretary of State Antony Blinken arrives in Israel on Tuesday, the first stop on a broader Middle East tour aimed at reviving ceasefire talks in Gaza.
• Trump beats Harris for the first time in a pre-election poll, 52% to 42%, The Hill says.
• The UN Security Council will hold its next meeting: on the agenda is aid to Russia from the DPRK and Zelensky’s peace plan.
• A small majority of 50.17% voted "FOR" Moldova's accession to the European Union. Less than 1.5% of the ballots remain to be counted.
There will be a second round of the presidential elections in Moldova - Sandu received 42.2%, and the second candidate (pro-Russian) 26.2%.
• Americans will elect a wartime president on November 5. This is not a prediction. This is reality - Atlantic Council
The next three years are the moment of maximum danger. If the United States successfully navigates this period together with its global allies and partners, the core strengths of the American economy, defense industry, technology and society should work to demonstrate their superiority over the forces of authoritarian regimes.
• "I will strike right in the center of Moscow": Trump told how he threatened Putin. Trump said that he threatened the Russian dictator with a strike on Moscow if he decided to attack Ukraine. In response, Putin allegedly swore "no way" to do this.
Trump told about his conversation with the head of the Kremlin in an interview with the American newspaper - The Wall Street Journal.
• Trump could become US president even if he loses November's election - Politico. Trump could invoke the 12th Amendment, which allows the Republican-controlled House of Representatives to elect a president if no candidate wins 270 electoral votes or their choice is not confirmed by Congress.
• Poland's economy struggled in Q3 2024 but continues to outperform other EU countries. Industrial production fell by 0.3% year-on-year in September, reflecting weak external demand.
• The sun has entered its most active period in 11 years, potentially causing technological disruptions - The Washington Post. That's because the sun has entered a key period known as solar maximum - the peak phase of activity in the sun's 11-year cycle.