United States
US markets were lower on Wednesday as rising bond yields and concerns about the pace of future Federal Reserve rate cuts weighed on investor sentiment. The Dow Jones Industrial Average dropped 0.96%, losing 409.94 points to close at 42,514.95. The S&P 500 mirrored this decline, falling 0.92%, or 53.78 points, to end the day at 5,797.42. The Nasdaq Composite was the worst performer, sliding 1.01%, or 296.48 points, to finish at 18,276.65. On the S&P 500, 9 out of 11 sectors were in the red, with technology and consumer discretionary stocks leading the declines, while Real Estate and Utilities managed to post gains, recovering from previous session lows.
Among large tech stocks, Nvidia fell 2.81% to $139.56 after announcing it had resolved a design flaw in its latest AI chip, which had previously caused production and delivery delays. Apple shares dropped 2.16% to $230.76 after an influential analyst predicted a cut in iPhone 16 orders, raising doubts about the company’s optimistic sales projections. Meta also saw a significant decline, falling 3.15% to $563.69. In contrast, Texas Instruments rose 3.82% to $201.37, buoyed by better-than-expected earnings driven by strong demand for chips used in electric vehicles produced in China.
Tesla fell 1.98% to $213.65 as investors awaited its earnings release. After the market closed, Tesla reported better-than-expected third-quarter profits, with earnings per share of 72 cents versus an expected 58 cents. This news led to a 8.5% surge in its stock price during after-hours trading.
McDonald’s dropped 5.10% after the US Centers for Disease Control and Prevention linked an E. coli outbreak to its Quarter Pounder burgers, resulting in 10 hospitalizations and one death. Boeing shares declined 1.23% to $157.91 after the company reported a third-quarter loss, citing an ongoing workers’ strike as the primary cause.
In economic data, US new home sales fell to their lowest level in 14 years, with high prices and elevated mortgage rates blamed for the decline. Meanwhile, US bond yields rose, with the 2-year yield increasing by 4 basis points to 4.075%, and the 10-year yield climbing by 3 basis points to 4.24%, as concerns about the growing budget deficit mounted.
The US dollar strengthened, with the dollar index rising 0.29% to 104.75. The dollar reached its highest level against the Japanese yen in years, trading at 152.59, marking a 1.0% gain.
Europe
European equity markets turned red on Wednesday, weighed down by a bleak consumer confidence outlook for the Eurozone and disappointing earnings results. The Euro Stoxx 600 declined by 0.30%, shedding 1.56 points to close at 518.84. Seven out of eleven sectors saw losses, though none fell by more than 1%. The materials and energy sectors were hit hardest, losing 0.84% as commodity and oil prices dropped.
In Germany, the DAX slipped 0.23%, falling by 44.29 points to 19,377.62, while France’s CAC 40 dropped 0.50%, losing 37.62 points to close at 7,497.48. In the UK, the FTSE 100 declined by 0.58%, shedding 47.9 points to finish at 8,258.64, as mining stocks were sold off and concerns grew around the upcoming UK budget.
Among individual stocks, Deutsche Bank fell 0.85% to €16.18 after reporting its third-quarter earnings and increasing provisions for bad loans, citing weakness in the German economy. This marks the second time in three months the bank has raised its provisions. Volvo exceeded earnings expectations but cut its forecasts, citing a slowdown in high-end vehicle purchases, causing its stock to tumble 5.88%. Stellantis, formerly Fiat Chrysler, gained 3.0% after reporting increased US sales of its Ram and Chrysler brands, driven by sales incentives to reduce inventory.
In the UK, Glencore fell 1.86% to 400.3 pence, reflecting lower commodity prices, while Shell dropped 0.95% due to falling oil prices. A decline in gold prices also hit precious metals producers. On the positive side, Reckitt, the maker of Nurofen and Strepsils, rose 3.99% after reporting a smaller-than-expected decline in sales, with increased consumer demand. The company reaffirmed its full-year guidance.
So far, only 36% of Euro Stoxx companies have beaten earnings expectations, well below the usual 55% earnings surprise ratio.
On the bond front, yields in Europe fell, with Germany’s 10-year yield down 1.5 basis points to 2.30%, and the 2-year yield dropping 7 basis points to 2.09%, reflecting concerns over Europe’s economic recovery. In contrast, UK bond yields rose, with the 2-year yield up 1.5 basis points to 4.085% and the 10-year yield increasing by 3.5 basis points to 4.20%.
In currency markets, the euro weakened against the US dollar, trading 0.14% lower at 1.0784, while the pound slid 0.44% to 1.2927 against the dollar.
Australia
The ASX200 is expected to open lower today as futures suffered a16 point drop falling 0.19%. The AUDUSD begins the trading at 0.6633 having fallen 0.7%. BHP shares were also lower trading at the equivalent of $42 in NY a drop of 1%.
The Australian equity market saw a modest advance on Wednesday, with the ASX200 rising by 0.13%, or 10.3 points, to close at 8,216.00. Seven out of the eleven sectors posted gains, with consumer staples leading, while the technology sector lagged behind.
The materials sector gained 0.40%, with BHP up 0.69% to $42.43, adding 29 cents, and Fortescue rising 1.23%, or 24 cents, to $19.77. Gold miners also performed well, supported by a new record in the underlying commodity price. Westgold increased by 0.91% to $3.32, and Newmont rose 1.04%, adding 90 cents to close at $87.35. However, Mineral Resources dropped sharply, falling 4.96%, or $1.88, to close at $35.99, as governance concerns led analysts to downgrade their forecasts.
In the technology sector, Wisetech gave back gains from the previous day, falling 1.44% to close at $106.07. NextDC dropped 2.09%, or 36 cents, to $16.87, and Xero declined by 79 cents to $147.10, rounding out the losses among the major tech stocks.
Coles and Woolworths both edged higher, despite facing the ACCC in court on charges of misleading consumers on their discounting practices. The companies argued that recent price increases were driven by supplier demands. The court was informed that ACCC executives would soon interview representatives from both companies.
Qantas rose 3.44%, or 26 cents, to close at $7.28 following a broker upgrade. The airline benefited from a decline in oil prices, potentially paving the way for a return to dividend payments. Meanwhile, QBE fell slightly, down 7 cents to $17.09, after ASIC initiated legal action against the company. ASIC alleges QBE misled customers by offering discounts in renewal notices, which were then eroded by the company’s pricing model. QBE acknowledged inconsistencies and is working to resolve the issue, cooperating with ASIC and compensating affected customers.
In the bond market, Australian yields moved higher, with the 10-year yield rising by 3 basis points to 4.46%, and the 2-year yield increasing by 2 basis points to 3.99%.
Commodities
Oil resumed its downward trend, with West Texas Intermediate (WTI) crude dropping 1.34%, down 96 cents to settle at US$70.76. Brent crude followed suit, declining by US$1.06, or 1.39%, to US$74.98. The decline was driven by an unexpected rise in US crude inventories and a rebound in refining activity. Additionally, a lack of fresh reports from the Middle East helped ease geopolitical concerns for the day.
Iron ore saw a sharp selloff in late Asian trading, breaking below the US$100 level. For most of the day, the commodity traded within a tight range but eventually closed in Singapore at US$98.71, down by US$1.90 or 1.88%. In New York trading, iron ore recovered slightly, edging up by 54 cents to US$99.25. Copper also saw declines, dropping by US$62 to US$9,522 per tonne, a fall of 0.64%.
Gold retreated from its recent record highs, falling 1.20%, or US$32.95, to trade at US$2,716.25. The stronger US dollar, rising US interest rates, and profit-taking after a significant rally were the main factors behind the decline. Silver faced even steeper losses, dropping 3.53%, or US$1.23, to US$33.62, as its recent outperformance against gold came to a halt. Bitcoin also fell, losing US$1,314, or 1.95%, to trade at US$66,184, as traders moved away from risk assets.
Economic Calendar
AU:
- Judo Bank Composite PMI (Oct) – 9:00 AM
EU:
- Composite PMI (Oct) – 7:00pm
US:
- Initial Jobless claims -weekly – 11:30pm
- S&P Composite PMI (Oct) – 12:45am
- New Home sales (Sep) – 1.00am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
