- Stock Investors Wary About China’s Stimulus Bid: Markets Wrap
Chinese shares fluctuated in a volatile session after a Finance Ministry briefing at the weekend
underwhelmed investors and a drop in factory prices reinforced concerns about the economy.
Onshore equities swung between gains and losses while Hong Kong shares dropped along with US
stock futures. China’s yuan weakened against the greenback, as did the Australian and New Zealand
dollars. Oil declined after China’s briefing lacked new incentives to boost consumption in the biggest
importer. - Dow jumps 400 points to a record on Friday, S&P 500 closes above 5,800 for the first time
The S&P 500 and Dow Jones Industrial Average powered to new highs on Friday and capped off a winning
week as banking behemoths ushered in a promising start to the third-quarter earnings season. The broad
index gained 0.61% to end at 5,815.03, while the Dow rallied 409.74 points, or 0.97%, to finish at 42,863.86.
Both averages hit fresh all-time highs and closed at records. The Nasdaq Composite added 0.33% to finish at
18,342.94 and less than 2% below its all-time high. What we’re seeing, and I think you’re seeing it hit pretty
hard today, in a good way, is a broadening of the market, said Craig Sterling, head of U.S. equity research at
Amundi US. The major averages also registered a fifth straight week of gains. The S&P 500 and Nasdaq
jumped 1.1% each, while the Dow toted a 1.2% gain. - Oil prices fall by more than $1 on deflation worries in China
Oil prices fell by more than $1 a barrel, losing over 1.5% in early trading on Monday, after disappointing
Chinese inflation data and a lack of clarity on Beijing’s economic stimulus plans stoked fears about demand.
Brent crude futures were down $1.26, or 1.59%, at $77.78 per barrel by 0020 GMT, and U.S. West Texas
Intermediate crude futures fell $1.20, or 1.59%, to $74.36 per barrel. The negative news from China
outweighed market concerns over the lingering possibility an Israeli response to Iran’s Oct. 1 missile attack
could disrupt oil production, though the U.S. has cautioned Israel against targeting Iranian energy
infrastructure. China’s deflationary pressures worsened in September, according to official data released on
Saturday, and a press conference the same day left investors guessing about the overall size of a stimulus
package to revive the sputtering economy. - Gold dips on firmer dollar; attention on Fed cues
Gold prices eased on Monday, weighed down by a firmer U.S. dollar, while investors looked out for fresh
clues on Federal Reserve interest rate cuts. Spot gold fell 0.2% to $2,651.99 per ounce by 0252 GMT after
rising 1% in the previous session. U.S. gold futures lost 0.3% to $2,669.20. The dollar index rose 0.1% on
Monday, not far from a near two-month high hit last week. A stronger dollar makes bullion less attractive for
other currency holders. - US producer price index unchanged on decline in gasoline costs
A measure of prices paid to US producers was unchanged in September, restrained by declines in gasoline,
suggesting further progress toward tamer inflation. The producer price index for final demand was flat from
August after rising 0.2% in the prior month, according to a Bureau of Labor Statistics report out Friday. From
a year ago, it rose 1.8%. A PPI measure that excludes volatile food and energy categories climbed 0.2% from
the prior month and 2.8% from a year ago. - Chinese finance minister hints at increasing the deficit at highly anticipated briefing
China’s Minister of Finance Lan Fo’an told reporters during a briefing that the central government has room
for a deficit increase, but noted such policies are still under discussion. Economists have said China needs
additional fiscal support, but Beijing has yet to announce any. Analyst projections for how much fiscal
stimulus is needed range from around 2 trillion yuan ($283.1 billion) to more than 10 trillion yuan. - ECB Is Set to Deepen Global Easing With Rate Cut It Didn’t Expect
The European Central Bank will probably advance the global push for monetary easing in the coming week
with an interest-rate cut that policymakers had all but ruled out just a month ago. The third quarter-point
reduction of this cycle is seen likely by economists to herald a longer-lasting acceleration in action by officials
seeking to cushion the euro zone from the hit to growth created by an extended period of high borrowing
costs, and now playing out with a lag. - The Federal Reserve may have pretty much just hit its 2% inflation target
This week’s inflation data provided more evidence that the Federal Reserve is nearing its 2% objective, a
mark that Goldman Sachs thinks the central bank may have already hit. From a policy standpoint, lower
inflation opens the door for the Fed to keep cutting interest rates. - China’s consumer inflation cools in September, PPI deflation deepens
China’s consumer inflation rate fell in September, while producer price deflation deepened, even as Beijing
rolls out more stimulus measures in a bid to revive flagging demand and shaky economic activity.
The consumer price index (CPI) rose 0.4% from a year earlier last month, against a 0.6% rise in August, data
from the National Bureau of Statistics (NBS) showed on Sunday, missing a 0.6% increase forecast in a Reuters
poll of economists. CPI was unchanged month-on-month, versus a 0.4% gain in August and below an
estimated 0.4% increase. The producer price index (PPI) fell 2.8% year-on-year in September, versus a 1.8%
decline the previous month and below an expected 2.5% decline. - Singapore Retains Tight Policy Stance as Growth Accelerates
Singapore’s central bank kept its monetary settings unchanged, defying a global wave of policy easing as the
city-state’s economy powered ahead in the third quarter. The Monetary Authority of Singapore, which uses
the exchange rate as its main policy tool rather than interest rates, maintained the slope, width, and center
of the currency band, it said in a statement on Monday. That will keep the local dollar on an appreciating
path to blunt imported price pressures. - North Korea Put Border Troops on High Alert After Drone Claims
North Korea briefly ordered its troops along the South Korean border to stand ready to fire after accusing
Seoul of sending drones into its capital Pyongyang in what it called a war provocation. The general staff of
North Korea’s army directed artillery units over the weekend to get fully ready to open fire for an immediate
strike on enemy targets if a similar infiltration recurs, the official Korean Central News Agency reported on
Sunday. - Harris Baits Trump on His Health Records After Releasing Her Own
Vice President Kamala Harris needled her Republican opponent Donald Trump for keeping his medical
records out of public view, saying he isn’t being transparent with American voters. Harris’ line of attack on
Sunday followed the release of a detailed report by her physician that said the 59-year-old Democratic
nominee is in excellent health. She portrayed Trump as ducking an interview with CBS’s 60 Minutes and a
second presidential debate with her, then sought to suggest his campaign might have something to hide. - China Orders Military Drills Around Taiwan to Warn Lai
China’s armed forces held more drills around Taiwan that they said were intended as a warning to the
democratically run government to halt separatist acts. The exercises on Monday involved army, navy, air and
missile forces, a spokesperson for the Chinese military said in a statement on social media. The activity
involved practicing a blockade on key ports and areas the first time the People’s Liberation Army has said
that. It was unclear how long it would last. - Hezbollah Drone Attack in Israel Kills Four Soldiers, IDF Says
Four Israeli soldiers were killed in a drone attack launched by Hezbollah south of Haifa, one of the deadliest
strikes against Israeli forces since the Jewish state has stepped up attacks on Lebanon. The Israel Defense
Forces said in a statement that seven were severely injured, adding that all wounded personnel have been
evacuated to hospitals, without revealing their total number. - Airbus shares rose 3.9% after the planemaker’s head of commercial aircraft Christian Scherer told
reporters that he isn’t concerned about the delivery numbers for September
Several analysts warned on Thursday that the company’s annual delivery goal (guidance of 770 deliveries in
2024) looked increasingly tough to achieve after Airbus delivered 50 jets in September. The figure is low, but
the reality behind it is not especially worrying, Scherer said. Airbus delivered 50 jets to 29 customers in
September, taking total year deliveries to 497 deliveries to 77 customers, according to statement. - JPMorgan Chase & Co. shares climbed 4.4% Friday after the company reported a surprise gain in net
interest income for the third quarter and raised its forecast for the key revenue source
THIRD QUARTER RESULTS: Managed net interest income $23.53 billion, estimate $22.8 billion. Adjusted
revenue $43.32 billion, estimate $41.9 billion. Investment banking revenue $2.35 billion, +29% y/y, estimate
$2.13 billion. FICC sales & trading revenue $4.53 billion, -0.4% y/y, estimate $4.36 billion. Equities sales &
trading revenue $2.62 billion, +27% y/y, estimate $2.37 billion. Advisory revenue $847 million, +10% y/y,
estimate $754.9 million. Equity underwriting rev. $344 million, +26% y/y, estimate $378.2 million. Debt
underwriting rev. $1.08 billion, +56% y/y, estimate $850.2 million. EPS $4.37. Standardized CET1 ratio 15.3%,
estimate 15.1%. Return on equity 16%, estimate 14.5%. YEAR FORECAST: Sees net interest income about
$92.5 billion, saw about $91 billion, estimate $91.1 billion. Sees Net interest income excluding CIB markets
about $91.5 billion, saw about $91 billion. Sees adjusted expense about $91.5 billion, saw about $92 billion.
Piper Sandler (overweight): Results are better than we and the market had expected, writes analyst R. Scott
Siefers, highlighting that management improved both the FY24E NII and expense guides. - Wells Fargo shares rose 5.6% on Friday after a surge in investment-banking fees helped counter a dip in
lending revenue as interest rates fell
THIRD QUARTER RESULTS: Net interest income $11.69 billion, estimate $11.88 billion. Revenue $20.37 billion,
estimate $20.41 billion. Commercial banking revenue $3.33 billion. Corporate and investment banking
revenue $4.91 billion. Wealth & investment management total revenue $3.88 billion. EPS $1.42. Net interest
margin 2.67%, estimate 2.7%. Return on equity 11.7%, estimate 10.8%. Common equity Tier 1 ratio 11.3%,
estimate 11.2%. FOURTH QUARTER OUTLOOK: Sees net interest income roughly in-line with 3Q24. 2024
OUTLOOK: Sees net interest income down about 9%, saw down about 8% to 9%. Still sees non-interest
expense about $54 billion. - Tesla shares fell 8.8% on Friday after Elon Musk unveiled prototypes of the automaker’s long-awaited
robotaxi Cybercab. Analysts note that the event gave a clearer picture of the company’s long-term
autonomous plans but was light on the details
Musk, who has a history of overpromising and underdelivering, announced that the Cybercab will be
available for purchase, probably, well I tend to be little optimistic on timeframes, but in 2026. Before 2027,
let me put it that way, Musk said. Meanwhile, Uber shares rose 10.8% to hit an all-time high as analysts were
positive about the stock after Tesla outlined its robotaxi vision. Barclays analyst Dan Levy (equal weight, PT
$220): Tesla’s Cybercab demo was similar to prior sketches, but the event was light on the details. Consumers
able to buy Cybercab, but Tesla also likely planning to operate fleet, Levy said. The near-term stock reaction is
likely to be sell the news, as the focus now shifts back to fundamentals, which has been neutral at best. Citi
analyst Ronald Josey: Tesla’s event clarified the company’s vision and timeline for its robotaxi, leading us to
be incrementally positive on Uber shares as a result. Importantly, details regarding distribution or a potential
ride-hailing app for the Cybercab were limited, which leads us to believe it’s still possible that Tesla could
partner with Uber for distribution in the future. - Fastenal shares rose 9.8% after the distributor of industrial and construction supplies provided thirdquarter results that showed a sequential improvement in daily sales
Jefferies (hold, PT $65): Analyst Stephen Volkmann highlights cadence of daily sales improved sequentially
each month in 3Q, with July up 0.5%, August up 2.1% and September at +3.2% y/y. Daily sales bottoming
seems behind us, he writes. Adds that FAST saw daily sales increase in its e-commerce business. Notes that
pricing was slightly negative to sales, due mostly to lower transportation costs, but was neutral to margin,
compared to the second quarter. William Blair (market perform): Analyst Ryan Merkel says that September
sales beat sequentials despite Hurricane Helene 35- to 55-basis-point hit. Our sense was investors were
negative going into the print, with good September sales and cost controls enough for a positive reaction
despite soft gross margins, Merkel wrote.
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