Wall Street found firmer footing overnight as chipmakers recovered lost ground and renewed diplomatic efforts around the Iran war took some heat out of the oil market. After the bell, attention turned to SpaceX, which delivered a profit well ahead of expectations and set the tone for a heavy run of technology earnings. Local investors look set to recover part of Tuesday’s mining-led slide when trade opens this morning.
United States
The Dow Jones Industrial Average led the major benchmarks with a 0.9% gain near 3pm in New York, while the S&P 500 edged up 0.2% and the Nasdaq added 0.1%. Breadth was solid, with more than 400 members of the S&P 500 finishing higher, and the VIX volatility gauge fell 6.4% to 17.26.
SpaceX lifted sentiment after the close. Elon Musk’s satellite, rocket and AI conglomerate reported net income of US$4.4 billion for the September quarter, more than double the average projection of US$1.88 billion, as revenue jumped 161% on a surge in its AI business and steady growth at Starlink. An exchange-traded fund tracking the S&P 500 climbed in late trade. Super Micro Computer also beat estimates with its preliminary results, although Netflix sank on a disappointing forecast. Meta Platforms reports later today.
Investors are becoming more discerning with their AI bets. South Korean computing supplier Elice plunged 32% on its Seoul debut, and CoreWeave bounced after a volatile stretch in which its bonds hit distressed levels on concerns over heavy borrowing. UBS’s Chief Investment Office expects a fundamentally strong third-quarter tech season but warned elevated expectations could trigger company-specific volatility. Edward Jones sees no sign of AI demand slowing and noted earnings growth is broadening beyond the largest companies, while Ameriprise argued for holding AI exposure selectively and keeping technology concentration in check.
The Wall Street Journal reported that Anthropic recorded a net loss of more than US$80 billion in the first half, citing a draft IPO prospectus, and separately that the company could spend US$750 billion on additional computing power in coming years.
In corporate news, Salesforce agreed to buy Braze for an enterprise value of about US$5.7 billion to bolster AI features in its marketing platform. General Motors tumbled as a narrower profit outlook overshadowed another US$20 billion in buybacks. United Airlines forecast weaker-than-expected fourth-quarter earnings as jet fuel costs bite, 3M topped estimates and lifted its full-year outlook for a second straight quarter, and Boeing secured regulatory approval for its 737 Max 10.
Housing data disappointed, with pending home sales falling 7.3% in September against expectations of a 0.5% decline. Long-dated Treasuries outperformed and the 10-year yield eased to 5.11%.
Europe
European equities steadied after a shaky start, with the Stoxx 600 closing 0.1% lower after falling as much as 0.8%. Brent dropped more than 3% at one stage on an unconfirmed report that Qatar and Pakistan had put forward a fresh proposal to revive negotiations, knocking oil off five-month highs before it pared losses. A diplomat involved in the process said reports of an imminent agreement were inaccurate, though talks continue.
Healthcare and travel and leisure stocks outperformed, while energy lagged. The session also featured a rotation out of the AI trade into defensives, with a UBS basket of European AI winners down 2.5%. ABB fell 5.0% despite third-quarter orders beating expectations, with Citi suggesting broader AI sentiment needs to improve before the shares can move higher. Rising yields and concerns over government finances continue to weigh on cyclical names, and Cavendish drew parallels with the dot-com era, when bond markets were among the first to question how the build-out would be funded. Germany’s 10-year yield fell six basis points to 3.40%.
Australia
ASX 200 futures were up 35 points, or 0.4%, to 8869 near 6am AEDT.
The S&P/ASX 200 closed down 28.8 points, or 0.3%, at 8816.9 on Tuesday, recovering from a loss of as much as 1%. BHP fell 1.6% to $59.50 after flagging a 19% drop in copper production, dragging the resources sector down 1.2%. Rio Tinto slipped 0.4% to $154.84 and Glencore lost 3.5% to $10.80. VanEck pointed to a tech sell-off in Korea, where the KOSPI plunged as much as 4.8%, along with French bond market turmoil and elevated oil prices as further headwinds.
National Australia Bank fell 1.8% to $39.20 after announcing plans to cut 2500 jobs. Defensives found support, with Coles up 1.9% to $24.25 and Woolworths 1.1% higher at $41.61, while WiseTech Global gained 1.4% and Xero added 1.7%. Corporate Travel Management soared 23.4% to $3.06 after IATA released a $65 million guarantee, Ingenia Communities rose 9.7% to $4.65 amid continuing talks with Warburg Pincus, and HUB24 climbed 3.9% to $67.08 on $4 billion in quarterly net inflows.
Woodside Energy reports third-quarter results this morning, and RBA deputy governor Andrew Hauser speaks at 9.30am AEDT.
Commodities and Currencies
Brent crude eased 0.7% to US$109.04 a barrel and West Texas Intermediate fell 1.8% to US$101.79. Gold slipped 0.5% to US$4122.50 an ounce, while iron ore rose 0.6% to US$91.05 a tonne. The Australian dollar firmed 0.3% to US70.02¢ as the Bloomberg Dollar Spot Index fell 0.2%, and the British pound gained 0.6% to US$1.3379. Bitcoin rose 0.8% to US$82,425.
Economic Calendar:
AU:
- Bloomberg Oct. Australia Economic Survey 12:00
EZ:
- Govt Debt/GDP Ratio 20:00
US:
- MBA Mortgage Applications 22:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
