27 Sep 2022

The three major U.S. stock indexes closed down in shock last night. As of the close, the Dow fell 1.11%, the Nasdaq fell 0.6%, and the S&P fell 1.03%. The yield on the 10-year U.S. Treasury bond rose 6.421% to close at 3.928%, a difference of about -43 basis points compared with the yield on the two-year Treasury bond. The fear index VIX rose 7.82%. Brent crude closed down 3.74%. Spot gold closed down 1.28% at $1,622.85 an ounce. The dollar index remained high, closing at 114.12.

The OECD cut its 2023 global growth forecast to 2.2% from 2.8% and said central banks need to keep raising interest rates. European Central Bank President Christine Lagarde said the economic outlook is increasingly bleak and inflation remains too high, with further rate hikes expected at the next few meetings. European Central Bank Governing Council member Nagel said it was necessary for the European Central Bank to raise interest rates decisively because of the high risk of unanchored inflation expectations. Traders have fully priced in another 75 basis point rate hike from the ECB in October.

EU countries plan to delay imposing an oil price cap on Russia due to opposition from countries such as Cyprus and Hungary. The European Commission met with member states over the weekend to try to find a compromise on a package of restrictive measures. Countries are likely to push for a tentative deal ahead of an informal meeting of EU leaders in Prague on October 6. U.S. congressional spending bill negotiators agreed to provide Ukraine with about $12 billion in new aid, according to people familiar with the matter.

Fed Collins said the top priority is to reduce inflation, which is likely to be near or already peaking. Achieving a soft landing is challenging, but it can be done. U.S. House of Representatives Energy and Commerce Chairman Pallone has introduced draft legislation to build the economy's oil reserves to help lower gasoline prices. The bill would authorize the Department of Energy to buy oil for the economy's oil reserves when prices fall below $60 a barrel and allow it to sell oil when prices exceed $90 a barrel.

Apple rose 0.23%. Three weeks after its debut, Apple started production of the iPhone 14 in India; the average iPhone selling price will hit a new high in Q3, reaching $892.

Google fell 0.36% after its CEO announced at an all-hands meeting this week that it would cut benefits, save costs and plan to increase productivity by 20%.

Amazon, up 1.2 percent, will hold a similar Prime Shopping Day on Oct. 11-12, which is held between July 12 and 13.

Tesla rose 0.25%, Tesla 2022 AI Day is set for September 30, U.S. time; a fire broke out at Tesla’s German factory; Musk will be questioned by Twitter lawyers about the acquisition this week.

Meta fell 2.88% after users sued Meta for tracking iOS users with the in-app browser.

Sources from: Investing.com; Reuters.com

Louis Yap

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