20 Oct 2022

Last night, the three major U.S. stock indexes fluctuated lower. As of the close, the Dow fell 0.33%, the Nasdaq fell 0.85%, and the S&P fell 0.67%. The yield on the 10-year U.S. Treasury bond rose 3.166% to close at 4.138%, a difference of about -42 basis points compared with the yield on the two-year Treasury bond. The VIX, the fear index, rose 0.85%. Brent crude closed up 1.84%. Spot gold closed down 1.36% at $1,628.98 an ounce. The dollar index remained high, closing at 112.91.

Russian President Vladimir Putin signed a decree requiring Donetsk, Luhansk, Kherson and Zaporozhye to enter a wartime state. The U.S. EIA Strategic Petroleum Reserve inventories in the week to October 14 were -3.564 million barrels, the lowest since the week of June 1, 1984. According to the EIA report, the four-week average supply of U.S. crude oil products was 20.408 million barrels per day, a decrease of 2.38% from the same period last year. U.S. President Joe Biden said the U.S. would sell 15 million barrels of crude from the Strategic Petroleum Reserve, with additional oil sales available if needed. When U.S. oil prices reach or fall below $70 a barrel, the U.S. will replenish the Strategic Petroleum Reserve (SPR). The EU will propose a new electricity market design in Q1 next year to cut the link between gas and electricity prices. Saudi Aramco is said to be moving ahead with an IPO of its oil trading unit.

The total number of new housing starts in the United States in September was an annualized 1.439 million units, an expected 1.475 million units, and the previous value of 1.575 million units. U.S. housing starts fell in September and applications for permits to build single-family homes fell, adding to evidence that 20-year-high mortgage rates are denting demand and hindering new construction. The total number of building permits rose to 1.564 million in September, led by multi-family dwellings. Applications for permits to build single-family homes fell 3.1% to 872,000 units in September, the lowest level in more than two years. The U.S. Mortgage Market Index fell 4.5% to 204.6 for the week ended Oct. 14, its lowest level since 1997.

ECB Governing Council Vasle: The ECB should raise interest rates by 75 basis points each at the next two meetings, and the ECB may start to shrink its balance sheet next year. British Conservative MP WRAGG has submitted a letter of no confidence in Prime Minister Truss. The UK Treasury will transfer £11bn to the Bank of England to cover losses from quantitative easing. Home Secretary Braverman has been sacked for breaching national security rules, and the government has confirmed Sharps' appointment as home secretary. Conservative Party whip Wendy Morton resigns.

Fed's Kashkari says still working towards soft landing, sees signs of global slowdown but few signs of local labor weakness; headline inflation may have peaked but core inflation has yet to peak Evidence; the more supply improves, the less the need for Fed rate hikes, which would need to see moderate core inflation before pausing, and the Fed may pause rate hikes sometime next year. Fed's Bullard said the Fed may choose to bring forward the tightening in 2023 to 2022; the Fed should not react to the decline in the stock market; the US GDP may be flat in the first half of next year, not negative growth, Q3 looks positive growth.

Apple rose 0.08%. It launched new products such as the iPad Pro before the shopping season, but it is said that the production of the iPhone 14 Plus has been reduced, and the price of the iPad air and iPad mini in Japan has been raised again.

Amazon fell 1.11% to offer online home and contents insurance in the UK.

Tesla rose 0.84%, Q3 earnings per share exceeded expectations, revenue was lower than expected, and there may be a stock repurchase of $5 billion to $10 billion in the future.

ASML rose 6.27%, and Q3 revenue and profit exceeded market expectations. It is expected that the direct impact of the new US regulations on the 2023 shipment plan will be limited.

Netflix surged more than 13%, Q3 performance exceeded expectations, and the net increase of paid subscribers exceeded expectations by 2.41 million.

United Airlines rose 4.97%, and Q3 revenue exceeded expectations. It is expected that the adjusted cost per available seat mile (CASM) in Q4 will increase by 11%-12% compared with the same period in 2019.

Procter & Gamble rose 0.93%, Q1 revenue and net profit in fiscal 2023 exceeded expectations, price increases offset the impact of declining demand, and the overall sales forecast for fiscal 2023 was lowered.

Abbott fell 6.54%, Q3 revenue EPS all exceeded expectations, and raised its EPS forecast for 2022.

Adobe rose 2.34%, as exchange rate changes affected growth, and the company's annual sales in 2023 are expected to be lower than expected.

Sources from: Investing.com; Reuters.com

Louis Yap

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