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Asian Shares in Tight Range, Gold at Record High: Markets Wrap
(Bloomberg) — Asia’s benchmark stock index traded in a narrow range early Monday, while gold touched a record high as tensions in the Middle East stoked demand for the asset as a haven.
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Australian stocks gained, while Japanese equities slipped and Hong Kong equity futures signaled declines. US futures rose after the S&P 500 notched up a sixth straight weekly increase, its longest winning streak this year following a slew of corporate results and signs the world’s largest economy remains robust.
Financial markets are being shaped by wagers on the health of the US and Chinese economies on the one hand, and the impact of hostilities in the Middle East and geopolitics on the other. China’s banks are expected to cut their loan prime rates Monday after the central bank lowered its key rates in late September. The expected reduction comes as investors grow skeptical over a fleeting recovery in Chinese stocks following a swath of stimulus measures.
“How influential further easing proves to be in China and Hong Kong equities and the yuan is up for debate, as market participants may be feeling a sense of policy easing fatigue,” said Chris Weston, head of research at Pepperstone Group in Melbourne.
Silver, palladium and platinum all rose. Bullion edged higher to hit an all-time high of around $2,725 an ounce on news Israel is discussing its attack on Iran after a Hezbollah drone exploded near Prime Minister Benjamin Netanyahu’s private home. Crude was little changed after dropping 8.4% last week.
Possible escalation in Middle Eat comes as finance ministers and central bank chiefs gather in Washington this week for the annual meeting of the International Monetary Fund and World Bank. Hanging over the meeting is the grinding Russia-Ukraine war and a toss-up US presidential election that offers starkly different economic outcomes for the world.
Bitcoin flirted with $70,000, a level last seen since June, amid a spurt of demand for dedicated US exchange-traded funds.
Malaysia’s politicians are bracing for protests after committing to rolling back fuel subsidies from next year which also risk stoking inflation. Traders will also be closely watching the Indonesian rupiah after new President Prabowo Subianto confirmed Sri Mulyani Indrawati will stay on as finance minister, a sign of policy continuity in Southeast Asia’s largest economy.
The reappointment of Indrawati in Prabowo’s administration “should be perceived positively by markets in terms of Indonesia’s medium-term fiscal consolidation narrative,” Barclays Plc strategists led by Themistoklis Fiotakis wrote in a note to clients.
In US earnings this week, Tesla Inc. faces questions on its production targets and regulatory challenges after the unveiling of its much-hyped Cybercab failed to enthuse investors and quell concerns over its recent vehicle sales.
Boeing Co. will also have to sooth investors increasingly concerned over production delays, depleted financial resources and labor strife. Striking workers will vote on Oct. 23 to ratify a tentative agreement on a new contract the company and their union reached at the weekend, including a wage increase of 35% spread over four years.
Investors are positioning for the US election in about two weeks as odds tilt toward both Donald Trump winning the White House and Republicans controlling Congress. Traders have already begun ramping up bets on assets which had thrived in the wake of the former president’s 2016 victory, and are now looking to the impact on proposed policies including a lift in trade tariffs.
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.1% as of 8:59 a.m. Tokyo time
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Hang Seng futures fell 0.4%
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Australia’s S&P/ASX 200 rose 0.7%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0868
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The Japanese yen was little changed at 149.60 per dollar
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The offshore yuan was little changed at 7.1163 per dollar
Cryptocurrencies
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Bitcoin rose 0.4% to $69,027.12
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Ether rose 1.3% to $2,746.97
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess and Chris Bourke.
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©2024 Bloomberg L.P.
Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
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The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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