6 Oct 2022

Last night, the three major U.S. stock indexes fluctuated higher. As of the close, the Dow fell 0.14%, the Nasdaq fell 0.25%, and the S&P fell 0.2%. The yield on the 10-year U.S. Treasury bond rose 3.191% to close at 3.751%, a difference of about -40 basis points compared with the yield on the two-year Treasury bond. The fear index VIX fell 1.79%. Brent crude closed up 2.21%. Spot gold closed down 0.58% at $1,716.45 an ounce. The dollar index remained high, closing at 111.21.

The U.S. ADP paid 208,000 jobs in September, slightly better than the 200,000 expected. U.S. businesses continued to add staff at a steady pace in September, suggesting labor demand remained healthy despite rising economic uncertainty. While labor demand showed some signs of slowing, the ADP data provided further evidence that the labor market remained strong, complicating the Fed's goal of cooling inflation without triggering a spike in unemployment. Initial jobless claims remain near record lows, and job openings, while down, remain very high. The U.S. government will release its September nonfarm payrolls report on Friday, which is expected to once again prove strong job growth and the unemployment rate to remain near a 50-year low. The probability of the Fed raising rates by 75 basis points in November rose slightly after the ADP data was released, from 65.4% to 69.2%.

OPEC+ agreed to cut production by 2 million bpd, and Saudi Arabia aims to adjust output to 10.5 million bpd in November-December, the OPEC+ representative said. OPEC's next meeting is in December, which means new output quotas will be in effect for at least November and December. This is worth noting as the Russian oil price cap/EU ban will take effect on December 5. The December meeting will decide on policy by February next year, when Russia could cut off crude oil supplies to Europe. OPEC countries very much dislike the precedent of the Russian oil price cap, which may one day be applied to them. They are desperate to see the plan fail, which could put them on the side of Russia against U.S. and European efforts to keep oil prices down. OPEC also agreed to extend the cooperation agreement until 2023. This shows their determination to keep oil prices above $80. Russian Deputy Prime Minister Alexander Novak said the oil price cap will lead to more expensive transportation and late delivery costs, which could lead to a temporary cut in Russian production.

The US September ISM non-manufacturing PMI was 56.7, expected to be 56, and the previous value of 56.9. Institutional analysis said that this data clearly means that the Fed will not change its policy direction, and will strengthen the Fed's hawkish stance and support the Fed's view of maintaining interest rates at a high level.

The Fed's Daly said that the goal is to raise interest rates and keep them unchanged. He believes that interest rates will not be cut in 2023, and he does not believe that interest rates will have a "hump shape". He believes that the Fed will raise interest rates and keep interest rates unchanged until inflation is close to 2 %. Fed's Bostic said he wants the Fed to achieve a rate of 4% to 4.5% by the end of the year, and warned against changing course "prematurely."

Apple rose 0.21% as Apple iPhone exports to India doubled: In the five months since April, Apple exported more than $1 billion of iPhones from India.

Microsoft rose 0.13% on reports that EU regulators will rule on whether to approve Microsoft's acquisition of Activision Blizzard by Nov. 8.

Google fell 0.19%, and Google's senior vice president sold 22,200 shares on October 3, valued at about $2.1785 million.

Amazon fell 0.12% after confirming it would suspend job hiring in its retail business. Tesla, down 3.46%, will remove ultrasonic sensors from Model 3/Y in the next few months and Model S/X from 2023.

Twitter fell 1.35% after Musk confirmed plans to move forward with the acquisition of Twitter at the original price of $54.20 per share.

Meta fell 0.93%, selling new ads on its Instagram and WhatsApp platforms.

Exxon Mobil Oil rose 4.04%, expecting Q3 operating profit to maintain the previous quarter's record high of $17.9 billion as natural gas earnings offset weakness in refining and chemicals, while industry margin changes will take a toll on Q3 energy product earnings $2.9-2.7 billion negative impact.

Verizon fell 1.03% to receive a $1.58 billion task order to upgrade technology and network infrastructure for nearly 260 U.S. embassies around the world over the next 10 years.

Sources from: Investing.com; Reuters.com

Louis Yap

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