21 Sep 2022

The three major U.S. stock indexes closed down in shock last night. As of the close, the Dow fell 1.01%, the Nasdaq fell 0.95%, and the S&P fell 1.13%. The yield on the 10-year U.S. Treasury bond rose 2.205% to close at 3.569%, a difference of about -40 basis points compared with the yield on the two-year Treasury bond. The fear index VIX rose 5.43%. Brent crude closed up 0.52%. Spot gold closed down 0.65% at $1,664.85 an ounce. The dollar index remained high, closing at 110.19.

Ukraine's Luhansk, Donetsk, Kherson, and Zaporozhye regions will hold a referendum on joining Russia on 23-27. The move, which would seriously escalate Moscow's confrontation with the West, would also mark Russia's tougher approach to Ukraine and the strongest sign yet that the Kremlin is considering a plan that Ukraine and the West consider illegal. Putin is considering the next steps in the conflict that has lasted nearly seven months. The conflict sparked Russia's worst confrontation with the West since the Cuban missile crisis in 1962, after Russia was defeated on the battlefield in northeastern Ukraine.

The total number of new housing starts in the United States in August was an annualized 1.575 million, and the total number of building permits in the United States fell to 1.517 million in August, the lowest level since August 2020. U.S. housing starts unexpectedly rose in August as rising rents boosted demand for multifamily construction, but soaring mortgage rates and stubbornly high home prices dented overall demand for housing. Aggressive monetary tightening by the Federal Reserve has significantly weakened the housing market, which has fallen to spring 2020 levels by most indicators. Housing construction will likely continue to be disadvantaged for the rest of the year.

Germany is close to reaching an agreement to nationalize energy giant Uniper, which will inject about 8 billion euros into Uniper through a capital increase. European natural gas futures rebounded after three straight days of losses, as traders weighed whether the continent's intensified efforts to ease a winter supply crisis would be enough to avoid a shortage. The market is also closely watching the steady build-up in European gas inventories, which are now at around 86%, just above the five-year average. Still, the threat of further disruptions to Russian oil supplies remains. And rising demand for liquefied natural gas in Asia will likely push up natural gas prices.

The Atlanta Fed’s GDPNow model today lowered its forecast for U.S. third-quarter GDP growth to just 0.3% from 0.5% on September 15. Steve Skancke, chief economic adviser at Keel Point, said the August CPI data will not change the Fed's hawkish sentiment against inflation, and the Fed is expected to raise interest rates by 75 basis points. With the economy and consumer spending slowing, the odds of a 100 basis point rate hike are low. A 100 basis point rate hike would signal the Fed's concern that inflation is out of control, implying a more aggressive policy response.

Apple rose 1.57%, and will raise the price of apps and in-app purchases in the App Store in some countries as early as October 5; it is expected that the iPhone 14 Pro series shipments will account for 60-65% of the overall iPhone 14 shipments.

Microsoft fell 0.85% and raised its quarterly dividend by 10% to $0.68 per share.

Amazon fell 1.98%, planning to provide 1,260 affordable homes in Washington, D.C. with a total price of $147 million.

Tesla fell 0.11%, plans to deploy thousands of "Optimus Prime" humanoid robots in its Texas factory; plans to double German car sales to 80,000 in 2022.

Meta fell 1.3%, and many states in the United States made another move, asking the court to resume antitrust litigation against Meta.

Ford Motor fell 12.32%. It is expected to have an inventory of 40,000-45,000 vehicles in Q3, and inflation-related supplier costs will be about $1 billion higher than initially expected.

General Motors fell 5.63%. Hertz plans to order 175,000 electric vehicles produced by General Motors in the next five years. GM will deliver the first electric vehicles in 23Q1, and plans to achieve an annual production target of 1 million electric vehicles in North America by 2025. . ARKQ, bought more than 120,000 shares of General Motors on Monday, the ARK fund's first purchase of the stock since May 9.

Sources from: Investing.com; Reuters.com

Louis Yap

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