- Chinese Shares Slide With Focus on Policy Briefing
Chinese stocks fell, underperforming their Asian peers as caution grows ahead of a key weekend briefing that
may shed more light on Beijing’s fiscal stimulus. The CSI 300 Index dropped 1.9% before the lunch break,
reversing Thursday’s gains. Elsewhere in Asia, stocks rose in Japan and South Korea, sidestepping losses on
Wall Street following hotter-than-expected core inflation that heightened the focus on the Federal Reserve’s
next move. Australian equities were flat. - Dow and S&P 500 retreat from records as sticky inflation report weighs on stocks
Stocks declined Thursday, with the S&P 500 and Dow Jones Industrial Average falling from records as
economic data pointed to stubborn inflation. The broad market index lost 0.21% to settle at 5,780.05, while
the Dow dropped 57.88 points, or 0.14%, to finish at 42,454.12. The Nasdaq Composite dipped 0.05% to end
at 18,282.05. - Oil eases though investors wary over potential Mideast supply disruption
Oil eased on Friday after a rally the previous day, but prices remained set for a second straight weekly gain as
investors weighed the impact of hurricane damage on U.S. demand against any broad supply disruption if
Israel attacks Iranian oil sites. Brent crude oil futures fell 39 cents, or 0.5%, to $79.01 a barrel by 0152
GMT. U.S. West Texas Intermediate crude futures dropped 32 cents, or 0.4%, to $75.53 per barrel. For the
week, both benchmarks were headed for a 1%-2% gain. In the United States, Hurricane Milton plowed into
the Atlantic Ocean on Thursday after cutting a destructive path across Florida, killing at least 10 people and
leaving millions without power. The destruction could dampen fuel consumption in some areas of the world’s
largest oil producer and consumer. - Gold drifts higher after data supports U.S. rate-cut bets
Gold prices climbed on Friday after recent data supported bets for a Federal Reserve interest rate cut next
month, while market participants awaited the U.S. Producer Price Index report for further direction.
Spot gold rose 0.5% to $2,641.70 per ounce by 0245 GMT but was down about 0.4% for the week. Prices hit a
record high of $2,685.42 last month. U.S. gold futures gained 0.7% to $2,658.90. The dollar index fell from a
two-month high, making bullion more attractive for other currency holders. Data on Thursday showed that
U.S. consumer prices rose slightly more than expected in September, while jobless claims increased to
258,000 in the week ended Oct. 5, versus estimates of 230,000. All eyes are now on the PPI data due at 1230
GMT. - Bank of Korea Joins Global Rate Cut Wave With Cautious Pivot
The Bank of Korea cautiously joined a global wave of central banks cutting rates as it finally saw enough
cooling of inflation and property prices to shift its attention to supporting the economy. The central bank
lowered its key policy rate by a quarter-percentage-point to 3.25% in a decision predicted by 20 of 22
economists surveyed by Bloomberg. - Singapore to Hold Currency Settings in Face of Sticky Prices
Singapore is set to buck the global easing trend and keep its policy bearings on hold as officials use the
strength of the currency to tackle still-exorbitant living costs. The Monetary Authority of Singapore is
expected to keep the slope, center and width of its currency band steady, though policymakers may strike a
dovish tone to pave the way for a shift in stance next year when price pressures abate. All but three
economists in a Bloomberg survey see no change to policy on Monday, and the bigger-than-average options
turnover this week suggests that traders are betting on the currency to strengthen after the decision. - China Investors Expect $283 Billion of New Stimulus This Weekend
Investors and analysts are expecting China to deploy as much as 2 trillion yuan ($283 billion) in fresh fiscal
stimulus as Beijing seeks to shore up the world’s No. 2 economy and boost confidence. That’s what they hope
the country’s finance minister will announce at a highly anticipated briefing on Saturday, according to a
majority of 23 market participants surveyed by Bloomberg. Most of the respondents expect the funding to
come in the form of government bonds. - The Fed is finally cutting rates, but banks aren’t in the clear just yet
Falling interest rates are usually good news for banks, especially when the cuts aren’t a harbinger of
recession. But the ride probably won’t be a smooth one: Persistent concerns over inflation could mean the
Fed doesn’t cut rates as much as expected and Wall Street’s projections for improvements in net interest
income may need to be dialed back. While all banks are expected to ultimately benefit from the Fed’s easing
cycle, the timing and magnitude of that shift is unknown, based on both the rate environment and the
interplay between how sensitive a bank’s assets and liabilities are to falling rates. - Main spending cuts and tax increases in France’s 2025 budget
France’s government presented on Thursday its 2025 budget aimed at plugging a gaping hole in the public
finances with 60 billion euros ($65.68 billion) worth of tax hikes and spending cuts. Spending hikes and tax
increases were among the main measures of the budget. - Inflation rate hit 2.4% in September, topping expectations; jobless claims highest since August 2023
The consumer price index increased a seasonally adjusted 0.2% for the month, putting the annual inflation
rate at 2.4%. Both were 0.1 percentage point higher than forecast. Excluding food and energy, core prices
rose 0.3% on the month, putting the annual rate at 3.3%. Both core readings also were 0.1 percentage point
above forecast. Initial filings for unemployment benefits took an unexpected turn higher, hitting as seasonally
adjusted 258,000 for the week ending Oct. 5, the highest total since Aug. 5, 2023. - Israel’s Security Cabinet Meets on Iran as Biden Urges Caution
Israel’s security cabinet met Thursday night to discuss how to retaliate against Iran for its missile attack last
week, as US efforts to influence the decision remained in question. A final decision on the timing of the strike
was to be made by Prime Minister Benjamin Netanyahu and his defense minister, Yoav Gallant, public
broadcaster Kan said. - Milton’s Surprise Was the Damage Unleashed by Powerful Winds
Hurricane Milton’s devastating path across Florida has left at least 10 dead, millions without power, and
destroyed homes and crops, as authorities warn it could take days to assess the full extent of the damages.
Milton delivered a quick, hard blow to the center of the state, tearing across the peninsula in just a few hours
before racing back out to sea. The storm surge that swamped Florida’s west coast on Wednesday was about
half as high as forecasters had feared. - Airbus monthly deliveries fall, piling pressure on annual target as production woes persist
Airbus’s annual aircraft delivery target looks challenging, but not impossible, analysts said Thursday, after the
planemaker’s September total fell to 50 from 55 year-on-year. Supply chain issues and other production
challenges continue to weigh on the aviation industry as airlines seek to renew their fleets. Airbus reduced its
annual delivery target in June and may trim it again in its third-quarter results, analysts at Citi said in a note. - Musk Shows Tesla Cybercab, Sees Sub-$30,000 Cost and 2026 Production
Elon Musk unveiled long-awaited prototypes of a Tesla Inc. robotaxi called Cybercab, saying production may
start in 2026 and that the vehicle could cost less than $30,000. The chief executive officer hitched a ride in
one of the two-door sedans on his way to the stage at the carmaker’s event late Thursday in Burbank,
California. Musk also showcased a futuristic-looking Robovan concept that he said could transport 20 people
at a time. - Stellantis Ousts CFO in Effort to Stabilize Reeling Business
Stellantis NV is replacing its finance chief as part of a broad management overhaul, a dramatic step by the
automaker to try to regain investor trust and stabilize its deteriorating business. Chief Financial
Officer Natalie Knight will leave the company and be replaced by Doug Ostermann, Stellantis said Thursday in
a statement. Knight, who joined the carmaker last year, faced backlash recently over last month’s profit
warning, which came a week after she characterized the company’s full-year margin target as ambitious. - Advanced Micro Devices Inc., looking to catch up with Nvidia Corp. in the lucrative market for artificial
intelligence processors, said that its latest chips are rolling out to data centers and will exceed some of the
capabilities of its rival. Still, AMD has a long way to go to match Nvidia. And investors were underwhelmed
by Thursday’s presentation. The stock fell 4%
Computer systems based on AMD’s MI325X processors will be available soon and have an edge over
machines running Nvidia’s H100, Chief Executive Officer Lisa Su said at a company event in San Francisco
Thursday. The MI325X’s use of a new type of memory chip will give it better performance at running AI
software, a process known as inference, she said. The Santa Clara, California-based company is trying to crack
Nvidia’s dominance in so-called AI accelerators, chips that have become essential to the development of
artificial intelligence systems. Like Nvidia, AMD has committed to bringing out new accelerators every year,
stepping up its pace of innovation. Under Su, who just marked her 10th anniversary in the top job at AMD,
the company has eclipsed its longtime nemesis Intel Corp. in market valuation. But both companies were
caught off guard by how ferociously the industry embraced AI accelerators. Of the two, AMD has responded
far more quickly and established itself as the closest rival to Nvidia. AMD, which is expected to report
quarterly results in the coming weeks, has set a target of $4.5 billion of revenue from the new type of chips
for this year, a rapid increase. Su has said the overall market for such chips will hit $400 billion in 2027. On
Thursday, she said that the company expects that number to reach $500 billion in 2028. - PayPal Holdings Inc. shares are down nearly 2% in premarket trading after Bernstein downgraded the
payments technology company to market perform from outperform
While product velocity is improving, we remain worried about competitive pressures on the cash-cow core
button, which often is still richly priced vs. peers, writes analyst Harshita Rawat. Further, we see some risks of
negative revisions (on gross profit) into 2025 because of exposure to interest rates. PT to $80 from $75. Stock
up more than 40% off a July low, it last closed at its highest since February 2023. - Huntington Ingalls Industries Inc. shares fell as much as 4.2%, the most intraday since Sept. 24, after
Wolfe Research analyst Myles Walton cut the recommendation on the military shipbuilder to peerperform
from outperform, citing challenges of attrition, unfavorable contracts and quality slips
We’ve remained constant in a view that military shipbuilding has one of the longest tails of growth; however,
that growth is progressing slower, Walton writes in a note to clients dated Oct. 9. Cuts 2024 FCF estimates by
~$280 million, or 45%, given the slip out of the next multi-year procurement buy for Virginia and Columbia
class submarines. Award to eventually come in 2025 with free cash-flow coming then, but goes to the choppy
FCF that has been hard to nail down in the past. Notes that HII continues to trade at a discount on FCF, but
choppiness could keep it that way. Adds that news of faulty welding at the Newport News Shipbuilding
division makes us less comfortable that we have a full picture of both any liability as well as the underlying
labor situation. Building ships on time and on budget remains a struggle for HII, Walton writes. Says hiring
and retention of workforce is a contributing factor. Additionally, Vertical Research Partners analyst Robert
Stallard cut the recommendation on HII to hold from buy on Oct. 9, according to data tracked by Bloomberg.
PT set to $275. - Delta Air Lines Inc. forecast profit and sales short of Wall Street’s estimates for the final months of the
year, suggesting a slow recovery from a challenging summer travel season
Adjusted earnings will be $1.60 to $1.85 a share in the fourth quarter, the carrier said in
a statement Thursday that also included third-quarter results. The midpoint is below the $1.75 average of
analyst estimates compiled by Bloomberg. Delta’s revenue growth guidance of 2% to 4% compares with an
average 4.4% year-over-year increase expected by analysts. The outlook underscores the hurdles Delta and
others face coming out of a summer in which an oversupply of US flight capacity left many carriers scrambling
to cut ticket prices and pull back flying plans. Unit revenue, a gauge of demand and fares, only turned
positive across the industry in some regions in September. Delta was also hurt by a technologyrelated system breakdown that led to thousands of canceled flights over several days in July. Travel demand
for the year-end holidays is looking very strong, Chief Executive Officer Ed Bastian said in an interview. Still,
the airline anticipates a slowdown around the upcoming US presidential election, which led to a 1 percentage
point reduction in its unit revenue guidance this quarter. - Nike shares gain 1.5% in premarket trading after Truist Securities raised the sportswear giant to buy
from hold, saying it seems to be moving in the right direction with the return of company veterans
including Elliot Hill
While we still view a turnaround process as long/uncertain, we’re more optimistic on shares as investor
expectations finally seem to accurately reflect this reality, analyst Joseph Civello writes in a note. He says that
with fiscal year guidance pulled, prior expectations for a 2H acceleration are no longer embedded in the
stock. Civello adds that some near-term wins, including investing more in marketing, improving wholesale
relationships and working with WNBA star Caitlin Clark, should be enough to show investors there are better
times ahead. PT to $97 from $83, implies a 18% increase from last price. - Exxon Mobil Corp. shares climb 0.7% after Scotiabank analyst Paul Cheng raised the recommendation
on the oil producer’s shares to sector outperform from sector perform and lifted the price target to a
Street-high $145 from $129 given its historical outperformance when the energy sector is challenged
He said Exxon was a more defensive stock in the oil sector and investors are facing a more bumpy oil price
outlook for the next several years, a type of environment in which Exxon typically outperforms the energy
sector by a wide margin. Although it is not a cheap stock in a traditional sense versus the other supermajors,
we think the market will continue to pay up for the premium given the uncertainty and risk in the oil market.
Separately, the analyst cut price targets for oil and gas producers including Chevron to $163 from $180,
ConocoPhillips to $115 from $120, Diamondback to $225 from $245 and Occidental to $65 from $80. - AIG shares rise as much as 1% in US premarket trading after the insurer is upgraded to overweight from
neutral at JPMorgan. Analysts say their bullish view on the stock reflects its outsized EPS growth and
attractive valuation
JPMorgan analyst Jimmy Bhullar also cites AIG’s lower exposure to risks facing commercial lines carriers, and
its high capital flexibility. Analyst’s outlook for the property and casualty insurance sector is upbeat, given the
group’s defensive risk profile. However, notes that expectations for margins at underwriters and topline
growth at brokers are optimistic, while valuation multiples have expanded. Investors who followed Bhullar’s
recommendation received a 0% return in the past year, compared with a 26% return on the shares. - Cloudflare shares are rallying on Thursday, with the software company trading at its highest level since
April
Stock up as much as 9.2% and on track for a third straight positive session. NET remains 15% below a
February peak. The advance came after the company named Chirantan Desai as its president of product and
engineering. Desai was previously president and chief operating officer at ServiceNow.
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