Wall Street was under pressure as the US government bond yields jumped following robust September retail sales data, strengthening bets of “higher-for-longer” rates, while the US government plans to impose new restrictions on Nvidia’s chip exports to China, sending chipmaker’s socks lower. In the meanwhile, the Hamas-Israel war continued to fuel risk-off sentiment, keeping gold prices at a recent high, and the VIX climbed 4% to 17.88. Tesla and Netflix will kick off the US tech earnings season tomorrow, which will be critical in steering market sentiment for the rest of the week.
The US dollar index was slightly lower as the king dollar weakened against the Eurodollar and the Australian dollar but strengthened against the other G-10 currencies. The New Zealand dollar slumped to a nearly one-year low level against the USD after the country reported lighter-than-expected Q3 CPI data, indicating the RBNZ may have peaked its rate hiking cycle.
In Asia, China will report a slew of economic data, including the third-quarter GDP. Consensus calls for 4.5% growth, a sharp slowdown from 6.3% in the second quarter. The US chip export ban may further press on Chinese tech stocks. Futures point to a mixed open across the APAC region. The Nikkei 225 futures rose 0.22%, the ASX 200 futures were up 0.35%, and Hang Seng Index futures slipped 0.14%.
Price movers:
- 7 out of 11 sectors in the S&P 500 finished higher, with Materials and Energy, leading gains, up 1.01% and 0.98%, respectively. The Technology sector was the laggard, down 1.77%, dragged by Nvidia.
- Nvidia’s shares slumped 8% before cutting losses amid the US government’s new restrictions ban on exports to China. The new rules will ban the Nvidia H800 and A800 chips that comply with the old restrictions. Nvidia said the new rule does not have an immediate impact on the company but expects a long-term dip in sales.
- Goldman Sachs’ shares fell 1.6% despite a beat on earnings expectations. The bank’s profit dropped 33% year on year to US$2.058 billion, and the overall revenue dipped 1% from a year ago to US$11.82 billion. The lukewarm performance was due to headwinds in investment banking and trading segment, as rising interest rates hurt M&A activities. But CEO Solomon expects “a continued recovery in both capital markets and strategic activity.”
- Crude oil rose slightly ahead of the release of the US weekly inventory data. While the war between Hamas and Israel may continue to add upside pressure to oil prices, a potential lift of Venezuelan exports caps some gains. The recent US production has hit a record high and is expected to drop for the week ending 13 October.
Today’s agenda:
- RBA Governor Michele Bullock Speaks
- China’s Q3 GDP, Industrial Production, Retail Sales and Unemployment Rate
- UK’s September CPI
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