- Asian Stocks Rise, Chinese Shares Reverse Gains: Markets Wrap
Equities in Asia rose after Wall Street closed higher, helped along by a rotation out of megacap tech to smallcap companies. Chinese stocks erased gains after a press briefing by finance and housing ministers.
China’s CSI 300 index turned flat after rising as much as 1.3% earlier. A gauge of Chinese property stocks
extended losses. China said that it will expand a program to support white list projects to 4 trillion yuan ($562
billion) from about 2.23 trillion yuan already deployed. Hong Kong stock benchmarks also trimmed gains. - Dow climbs 300 points to another record close on Wednesday
The Dow Jones Industrial Average rose to a record close on Wednesday, bouncing back from a sell-off in the
previous session. The blue-chip index gained 337.28 points, or 0.79%, and ended at 43,077.70. The S&P 500
added 0.47% to 5,842.47, while the Nasdaq Composite jumped 0.28% to close at 18,367.08. - Oil inches up after surprise drop in U.S. crude stockpiles
Oil prices rose in early Asian trade on Thursday, paring sharp losses over the past two sessions, after industry
data showed an unexpected drop in U.S. crude stockpiles last week. Brent crude futures rose 45 cents, or
0.6%, to $74.67 a barrel by 0023 GMT, while U.S. West Texas Intermediate crude futures were at $70.84 a
barrel, up 45 cents, or 0.6%. Both crude benchmarks settled down on Wednesday, closing at their lowest
levels since Oct. 2 for a second day in a row. The benchmarks are down 6-7% so far this week after the
Organization of the Petroleum Exporting Countries and the International Energy Agency cut demand
forecasts for 2024 and 2025. Prices have also fallen as risk premiums have cooled with fears having eased
that a retaliatory attack by Israel on Iran could disrupt oil supplies, though uncertainty remains over conflict
in the Middle East. - Pullback in U.S. yields spurs gold’s march toward record peak
Gold advanced towards record highs on Wednesday as gains in non-yielding bullion were bolstered by
weakness in U.S. bond yields and expected rate cuts by major central banks, with additional safe-haven
support from ongoing geopolitical conflicts. Spot gold rose about 0.6% to $2,676.03 per ounce, inching close
to a record high of $2,685.42 it hit on Sept. 26. U.S. gold futures gained 0.5% to $2,692.60. - China’s Economy Likely Grew at Weakest Pace in Six Quarters
China’s economy likely grew at its weakest pace in six quarters, prompting Beijing to roll out a swath
of stimulus measures in late September to draw a line under the slowdown. Data on Friday is set to show the
economy expanded 4.5% in the third quarter from a year ago, according to economists surveyed by
Bloomberg. That would be the least since March 2023, though it should keep expansion for the first nine
months at 4.9%, in line with Beijing’s annual goal of around 5%. - Australia’s Burst of Hiring Sees Traders Pare Rate-Cut Bets
Australia’s powerful stretch of hiring extended into September and the unemployment rate held steady,
prompting a rise in the currency as traders scaled back bets on the Reserve Bank’s first interest-rate cut.
The currency climbed as much as 0.4% and the yield on policy-sensitive three-year government bonds
jumped to the highest since July 31 after data Thursday showed employment rose 64,100, more than double
estimates, and the jobless rate held at a downwardly revised 4.1%. - Japan’s Exports Fall Most Since 2021 Amid Global Slowdown
Japan’s exports declined by the most since February 2021 in September, sapping momentum from the
country’s economic recovery as global demand weakened. Exports declined 1.7% from a year ago led by cars,
mineral fuels and construction machinery, and slipping to negative growth for the first time since November
last year, the Ministry of Finance reported Thursday. The reading missed economists’ forecast of a 0.9% gain.
Imports rose 2.1%, led by electronic calculators and semiconductor parts, and slightly missing the consensus
estimate of a 2.8% gain, while the trade deficit narrowed to ¥294.3 billion ($2 billion). - India’s Own Private Credit Firms Drive First $10 Billion Year
India’s private credit market is headed for its first $10 billion year, as an unprecedented flurry of lending from
local firms is fueling competition with global giants such as KKR & Co. and Oaktree Capital Management.
Domestic firms are gaining market share thanks to India’s push for infrastructure spending, which has
sprouted a crop of smaller, greener borrowers needing smaller loans. Local players, such as Neo Asset
Management and Edelweiss Alternative Asset Advisors Ltd., are snapping up those deals by flexing
competitive advantages: existing relationships, proximity to borrowers and an ability to deliver cash quickly. - Hedge Fund Millennium Allocates Money to Hong Kong’s Centerline
Millennium Management LLC has agreed to parcel out money to Hong Kong-based Centerline Investment
Management Ltd., the latest example of a multi-strategy firm using external hedge fund managers to help
bolster returns as assets expand. Under the agreement, Centerline will trade hundreds of millions of dollars
for a so-called separate managed account owned by Izzy Englander’s firm, said people with knowledge of the
matter, who requested not to be identified discussing private information. Representatives from Millennium
and Centerline declined to comment. - Harris Vows to Be Different Than Biden in Fiery Fox Interview
Vice President Kamala Harris sought to deflect criticism over the administration’s handling of the border
crisis, her stance on transgender rights and her ties to President Joe Biden in a combative interview
Wednesday on Fox News. Let me be very clear, my presidency will not be a continuation of Joe Biden’s
presidency, and like every new president that comes in to office, I will bring my life experiences, my
professional experiences and fresh and new ideas, Harris said. - Intel faces headwinds in China as trade body calls for security probe
In a statement, the CSAC alleged Intel’s CPU chips contained vulnerabilities and security risks, and accused
the company of threatening national security as well as consumer interests and rights. According to Daniel
Newman, CEO of The Futurum Group, the accusations may be politically motivated and represent serious
headwinds for Intel. - China pledges more financial support for whitelist real estate projects
China will expand its whitelist of real estate projects and speed up bank lending for these unfinished
developments to 4 trillion yuan ($561.8 billion) by the end of the year, the country’s housing ministry said
Thursday. A total of 2.23 trillion yuan had already been approved in loans to whitelisted developers. That
figure will almost double to 4 trillion yuan by the end of 2024, a senior official said. Launched in January,
China’s whitelist initiative allows city governments to recommend residential projects to banks for speedier
lending. The intent was to ensure the completion of unfinished housing projects so they could finally be
delivered to buyers. - China won’t renounce use of force over Taiwan; Xi visits frontline island
China will never commit to renouncing the use of force over Taiwan, the government in Beijing said on
Wednesday after another bout of war games and a visit by Chinese President Xi Jinping to the scene of a
famous defeat for Taiwanese forces. China, which views democratically governed Taiwan as its own territory,
staged a day of large-scale drills around the island on Monday that it said were a warning to separatist acts
following last week’s national day speech by Taiwan President Lai Ching-te. - LVMH shares fell 3.7% after sales of fashion and leather goods fell for the first time since the pandemic,
revealing the scale of the slump in demand from Chinese consumers
Organic revenue at the key unit whose brands include Louis Vuitton and Christian Dior declined 5% in the
third quarter. That was the worst performance since the second quarter of 2020, when the world went into
lockdown. Most of our markets currently face economic challenges including mainland China, LVMH Chief
Financial Officer Jean-Jacques Guiony said, adding that consumer confidence in mainland China today is back
in line with the all-time low reached during Covid. LVMH’s organic sales in the region that includes
China fell 16% in the quarter at LVMH, more than estimates, a disappointment for a group that had been
among the most resilient in the face of cooling demand in the country. All of the group’s main units
performed worse than analysts had forecast. The results are a clear negative for the industry ahead of the
third quarter reporting season and in the run-up to key Christmas and Chinese New Year trading periods,
Citigroup analyst Thomas Chauvet wrote. - ASML shares extended a decline on Wednesday, a day after the chip-equipment maker reduced 2025
guidance and reported weaker-than-expected quarterly bookings
Cantor Fitzgerald’s CJ Muse (overweight) says ASML shares could trade range-bound with a multiple of 25x30x 2025 earnings, or within the range of €600-€700 for the time being, with all eyes on the capital markets
day next month. There is no doubt there is loss of credibility following Tuesday’s selloff, he says. Expects
ASML’s 2025 EPS to reach €24 at midpoint versus a previous estimate of €30. With AI demand still intact, the
upcoming TSMC release may prove to be a positive catalyst for AI-focused stocks, including Nvidia and
Broadcom. It looks like we may need to exercise more patience until the cyclical recovery is clearer, says
Bernstein’s Sara Russo (outperform). She cites headwinds including delays to chipmakers’ capacity
expansions, pushouts from certain customers and clarification that China demand is expected to normalize. - Adidas shares fell 6.3% as a guidance upgrade from the German sportswear firm failed to impress
investors
PRELIMINARY THIRD QUARTER RESULTS: Prelim gross margin 51.3%, estimate 50.5%. Prelim operating profit
EU598 million, estimate EU558.6 million. Prelim revenue EU6.44 billion, estimate EU6.45 billion.
YEAR FORECAST: Sees operating profit about EU1.2 billion, saw about EU1.0 billion, estimate EU1.13 billion.
Baader (reduce, PT €169): Analyst Volker Bosse says the new and uplifted guidance is already reflected in
consensus expectations. Writes that third quarter Ebit would have been in line with their expectations, rather
than a beat, if not for the Yeezy contribution, which Adidas had guided to sell at costs. - Morgan Stanley joined the rest of their Wall Street rivals in posting better-than-expected revenue,
fueling a 32% profit surge for the third quarter and sending the shares up 6.5%
Revenue from the trading business rose 13%. A rebound in dealmaking also fueled higher investmentbanking fees. The firm’s critical wealth unit also stood out, generating record revenue of $7.27 billion, higher
than analysts’ expectations, with $64 billion in net new assets. The unit boosted its pretax margin to 28%,
driven by growth in fee-based assets. Morgan Stanley’s fixed-income trading business posted $2 billion in
revenue, compared with estimates of $1.85 billion. That business line is the smallest among the big-five
trading desks on Wall Street. In equities, revenue totaled $3.05 billion. Equities gains have helped banks
counter the slowdown in the fixed-income business, with a 27% surge at JPMorgan, and 18% at both
Goldman Sachs Group Inc. and Bank of America Corp. Fees from advising on deals totaled $546 million,
compared with estimates of $525 million. Equity-underwriting revenue was $362 million as the return of
public listings and secondary offerings raised speculation those markets will fully reopen. Morgan Stanley
now oversees $7.6 trillion in assets across its investment management and wealth unit. - Prologis Inc. shares climbed 4.6% Wednesday after the real estate investment trust’s forecasts for the
full year bolstered confidence in industrial property market demand
THIRD QUARTER RESULTS: Core FFO per share $1.43, estimate $1.38. Occupancy 95.9%, estimate 96.3%.
Revenue $2.04 billion, estimate $1.94 billion. Operating income $1.25 billion. Core FFO $1.37 billion, estimate
$1.31 billion. YEAR FORECAST: Sees Core FFO per share $5.42 to $5.46, saw $5.39 to $5.47, estimate $5.41.
Sees EPS $3.35 to $3.45, saw $3.25 to $3.45. Sees occupancy 96% to 96.5%, saw 95.8% to 96.8%, estimate
96.3%. Bloomberg Intelligence analyst Lindsay Dutch: Prologis’ narrowed guidance for occupancy, same-store
net operating income growth and core funds from operations suggest that demand isn’t weakening further.
This trend could precede stronger supply-demand dynamics in 2025 as new supply is also moving in the right
direction. JPMorgan analyst Michael Mueller (overweight, $138 price target): Given the recent concerns
about slower decision making and macro uncertainties, our high take on the guidance/driver changes and the
quarter’s trends is generally positive. On the external growth front, some items that stood out to us were
~$1B+ of acquisitions executed in the quarter, increased development stabilization guidance (up ~$300
million from 2Q), and the development start guidance reduction by ~$750 million. - United Airlines Holdings Inc. reported a third-quarter profit ahead of Wall Street’s expectations in a
sign the company is bouncing back from widespread fare discounts that squeezed many carriers this
summer
Adjusted profit was $3.33 a share in the period, topping the $3.07 average estimate. The company also
authorized a new $1.5 billion share buyback, including as much as $500 million this year. The results indicate
that United is recovering quickly from deep price cuts across the industry as airlines fought to fill an excess of
seats in the market during the summer travel season. Airlines cut unproductive flying plans in mid-August as
expected and United saw a clear inflection point in our revenue trends, Scott Kirby, the carrier’s chief
executive officer, said. United said it expects an adjusted fourth-quarter profit of $2.50 to $3 a share. The
midpoint of that range is consistent with the $2.75 per share expected by analysts. Third-quarter revenue of
$14.8 billion also exceeded the $14.7 billion consensus. The results were helped by a 13% increase in
corporate travel sales from a year ago and a 5% rise in premium revenue. Sales of basic economy tickets, a
bare-bones fare used to lure travelers from discount carriers, jumped 20%. United had earlier said an
industry gauge of demand and pricing turned positive in August, ahead of a September improvement across
the industry, as airlines began cutting unprofitable routes and fares started moving higher.
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