- Bond Yields Decline as Asian Stocks Tread Water: Markets Wrap
Treasuries advanced in Asian trading as did several major equity markets, with Japan the exception ahead of
an election that risks adding selling pressure on its stock market and currency. Mainland China and Hong
Kong shares rallied alongside those in Australia and South Korea. The moves offset Japan’s slide to keep
MSCI’s Asian index flat. US futures were little changed after the S&P 500 rose 0.2% and the Nasdaq
100 climbed 0.8%. The moves partly reflected the 22% leap for Tesla Inc. shares on strong earnings and
forecast. - S&P 500 rises to end three-day losing run, lifted by surge in Tesla
The S&P 500 bounced back on Thursday, posting its first positive day in a week that has been beset by higher
rates. The S&P 500 added 0.21% to 5,809.86 and snapped a three-day run of losses. The Nasdaq Composite
jumped 0.76% and closed at 18,415.49. The Dow Jones Industrial Average lost 140.59 points, or 0.33%, to end
at 42,374.36. The blue-chip index notched a four-day losing streak, its first since June. - Gold eyes weekly gains as geopolitical uncertainty boosts appeal
Gold prices eased on Friday but was on track for a weekly gain, as investors sought the safe-haven metal
amid rising geopolitical tensions, while palladium was poised for its strongest week in more than a month.
Spot gold slipped 0.2% at $2,730.09 per ounce, as of 01:55 GMT. Prices hit a record high of $2,758.37 on
Wednesday and gained 0.4% so far in the week. U.S. gold futures fell 0.2% to $2,742.80. Israeli strike killed at
least 17 people at a school in central Gaza. U.S. and Israeli negotiators will gather in Doha to prepare for
renewed talks on a Gaza ceasefire deal. - Oil heads for weekly gain as Middle East tensions keep traders on edge
Oil prices rose on Friday and are on track for a weekly gain of more than 1%, as tensions in the world’s
top oil-producing region, the Middle East, and a restart in Gaza ceasefire talks in the coming days kept
traders on edge. Brent crude futures climbed 45 cents, or 0.6%, to $74.83 a barrel by 0036 GMT while U.S.
West Texas Intermediate crude was at $70.62 a barrel, up 43 cents, or 0.6%. We remain of the view that the
right price for crude oil currently is around $70 where it is now, as we await fresh price drivers, including the
outcome of China’s NPC Standing Committee meeting as well as Israel’s response to Iran’s October 1 missile
attack, IG market analyst Tony Sycamore said in a note, referring to WTI prices. Both benchmarks settled
down 58 cents a barrel in the previous session after prices fluctuated against expectations of heightened or
reduced tensions in the Middle East. - BOJ’s Ueda Signals No Hike Next Week, Noting Time Is on His Side
Governor Kazuo Ueda said the Bank of Japan has time to consider its next policy steps, signaling the central
bank won’t hike interest rates next week even after the yen fell to an almost three-month low. I believe we
have enough time for making a policy decision, Ueda told reporters in Washington after a meeting with his
Group of 20 counterparts. - US Initial Jobless Claims Fall Back to Pre-Hurricanes Levels
New applications for US unemployment benefits declined for a second week, to levels seen before Hurricanes
Helene and Milton hit Southeastern states. Initial claims decreased by 15,000 to 227,000 in the week ended
Oct. 19. The median forecast in a Bloomberg survey of economists called for 242,000 applications. - Chinese Stimulus Insufficient to Curb Deflation Risks, IMF Says
China’s recent barrage of fiscal measures fall short of what’s needed to address deflationary risks plaguing
the world’s second-largest economy, according to one senior International Monetary Fund official.
While recent policies, in principle, could boost the IMF’s forecast of 4.8% growth for China this year, the
central government has to spend more to address the property crash and ease price pressures, according
to Krishna Srinivasan, the organization’s Asia-Pacific department chief. - China Refrains From Cutting Policy Rate After Record Trim
China’s central bank kept its one-year policy rate unchanged, after slashing funding costs by the most on
record a month ago, suggesting authorities are cautiously pacing monetary stimulus to support the economy.
The People’s Bank of China kept the interest rate on the medium-term lending facility steady at 2% while
draining a net 89 billion yuan ($12.5 billion) for October, according to a statement Friday. All but one of the
15 economists polled by Bloomberg predicted the rate would remain unchanged. - Record Defaults Hit $800 Billion Chinese Local Debt Market
Defaults in an opaque corner of China’s local debt market have surged to a record high, ensnaring investors
who’d assumed the securities had an implicit guarantee from the state. It wasn’t supposed to be this way.
Last year, confronted with a wave of bad debt issued by municipalities’ financing arms, the country’s central
government took action. It gave local governments permission to raise around 2.2 trillion yuan ($309 billion)
in new bonds to help repay creditors and ordered state banks to provide additional refinancing support. - China Plays Nice With US Partners Ahead of Possible Trump Return
A potential Donald Trump victory and economic troubles at home have prompted China to embark on a
charm offensive, particularly with US allies and partners. From proclaiming a desired fresh start with Japan to
a detente with India, Chinese officials have sought to dial down diplomatic friction days ahead of the US
presidential election. Beijing has also signaled its intent to improve ties with the UK and Australia, a seeming
departure from the kind of combative diplomacy it became famous for during Trump’s first term. - Trump 2.0 Haunts World Economy Chiefs Gathering in Washington Before Vote
The world’s financial leaders are gathered in Washington, ostensibly to discuss technical stuff: debt, inflation,
interest rates. What’s really on their minds is Donald Trump. The ex-president’s potential return to the White
House has loomed large over this week’s annual meetings of the International Monetary Fund and World
Bank. At public seminars and panels, or behind closed doors at steak-house dinners, discussion kept turning
to the vote that’s less than two weeks away. - Hermes sales rose as the Birkin bag maker met resilient demand for its pricey handbags, bucking the
broader luxury market slump that’s dragged down peers
Sales increased 11.3% at constant exchange rates in the third quarter, Hermes International SCA said, just
ahead of analysts’ estimates. Hermes has held up better than rivals amid the luxury slowdown because it
caters to the wealthiest clients, whose spending tends to be more reliable than less well-heeled customers.
The French company enjoys strong pricing power and waiting lists for its most coveted handbags. Hermes’
sales growth confirms an industry-beating resilience, supported by the more premium parts of the group’s
offering, such as leather goods and ready-to-wear, Jefferies analyst James Grzinic said. Speaking to reporters,
Hermes Chief Financial Officer Eric du Halgouet said Hermes isn’t seeing any change in global trends early this
quarter. Shares of Hermes rose 1.1%. Hermes’ sales in Europe, Japan and the Americas all exceeded
estimates in the quarter, while the region that includes China increased 1%, below expectations for 2.3%
growth. All divisions grew except for the watches unit, which tumbled 18%. - Unilever Plc’s sales growth is accelerating as Chief Executive Officer Hein Schumacher’s turnaround of
the maker of Hellmann’s mayonnaise gathers pace
Revenue increased 4.5% in the third quarter, beating the 4.3% expected by analysts, the maker of soap and
stock cubes said . Consumers are buying more of its brands again with volumes up for the fourth consecutive
quarter, it added. Unilever’s shares rose 2.9%. Most of Unilever’s quarterly sales rise came from higher
volumes, with input cost inflation less marked than in previous quarters. Unilever’s Chief Financial
Officer Fernando Fernandez said that trend will continue for now, but warned that further increases are on
the horizon. Several key commodities in our materials basket are starting to pick up, leading to moderate cost
inflation, and what we expect will be higher pricing over time, he said on a call with analysts. Consumer
sentiment is higher in Europe and the US than a year ago, Schumacher said, although spending on luxury
products such as its prestige beauty line has come under pressure. Emerging markets, which represent the
majority of sales and have historically been Unilever’s growth engine, performed poorly compared to the
group overall with underlying sales growth of 2.9%. There was weakness in China, falling prices in India and
operational challenges in Indonesia where shoppers have been boycotting western brands over the war in
Gaza. - Barclays Plc third-quarter results offered signs that executives are delivering on the lofty promises they
made earlier this year to boost the bank’s lagging returns
Better-than-expected income from its two biggest divisions fueled a 5% increase in total revenue to £6.55
billion, which topped analyst expectations. Pretax profit for the period soared 18% to £2.23 billion. Barclays
shares rose 4.2%. The British bank posted a surprise increase in fixed-income trading revenue while it’s stock
traders generated £692 million in income in the period, topping the £688 million average estimate. The
company also now expects full-year net interest income to be greater than £11 billion, up from an earlier
forecast, as it continues to benefit from stubbornly high interest rates. Revenue from the company’s UK
consumer business climbed 4% to £1.95 billion in the quarter. The results are a key win for Chief Executive
Officer C.S. Venkatakrishnan, who kicked off a multi-year plan to boost returns at Barclays in February by
plowing more capital into its UK operations and focusing on more profitable businesses and clients in its
investment bank. - ServiceNow Inc. reported strong third-quarter sales and bookings as the software company expands its
suite of AI tools
Subscription sales, which account for the bulk of ServiceNow’s revenue, increased 23% to $2.7 billion in the
period. Current remaining performance obligation, a measure of booked sales, increased 26% in the period
ending Sept. 30. Both exceeded analysts’ estimates. The company makes applications that help companies
organize and automate their personnel and information technology operations. Like its peers, ServiceNow is
baking generative AI features into its products and offers a pricier tier with those tools. The company’s main
generative AI assistant product, Now Assist, is the fastest-growing in company history, Chief Executive
Officer Bill McDermott said. The average contract premium for users of Now Assist is 30%, he added. Profit,
excluding some items, was $3.72 per share, ahead of analyst estimates. The company saw a spike in large
deals worth more than $5 million in annual contract value, it said. ServiceNow hired more than 1,200 workers
in the quarter. The company now has 25,743 employees. Much of the hiring is of quota-bearing sales
representatives, which shows our confidence in the opportunity that we see in front of us, said Chief
Financial Officer Gina Mastantuono. - Newmont Corp. shares tumbled 14.7% after investors soured on earnings results that suggest the top
gold producer is struggling to control mining costs and capitalize on surging bullion prices
THIRD QUARTER RESULTS: Adjusted EPS 81c, estimate 85c. Sales $4.61 billion, +85% y/y, estimate $4.69
billion. Attributable gold production 1.67 million oz, +29% y/y, estimate 1.66 million. Average realized gold
price per oz sold $2,518, estimate $2,445. Adjusted Ebitda $1.97 billion, estimate $2.27 billion. Free cash flow
$760.0 million, estimate $828.5 million. Gold all-in sustaining cost per ounce $1,611, +13% y/y, estimate
$1,445. COMMENTARY: Positioned to meet 2024 production guidance; expects to deliver attributable
production of 1.8 million gold ounces at an All-In Sustaining Cost (AISC) of $1,475 per ounce in the fourth
quarter. The company is the first major gold producer to post results in an earnings season where investors
have been anticipating bumper profits from bullion producers. Gold is among the best-performing metals this
year, surging more than 30% since the start of January and setting repeated record highs. - Lam Research shares rose 5.1% on Thursday after the semiconductor equipment maker reported
better-than-expected first quarter results. Analysts note that investors will welcome this report after
ASML’s weak report earlier this month
FIRST QUARTER RESULTS: Adjusted EPS 86c vs. 67c y/y, estimate 81c. Revenue $4.17 billion, +20% y/y,
estimate $4.06 billion. Adjusted gross margin 48.2% vs. 47.9% y/y, estimate 47.1%. Adjusted operating
margin 30.9% vs. 30.1% y/y, estimate 29.6%. Capital expenditure $110.6 million vs. $77.0 million y/y,
estimate $106.4 million. SECOND QUARTER FORECAST: Sees adjusted EPS 77c to 97c, estimate 85c. Sees
revenue $4 billion to $4.6 billion, estimate $4.22 billion. Sees adjusted gross margin 46% to 48%, estimate
46.8%. Sees adjusted operating margin 29% to 31%, estimate 29.7%. JPMorgan analyst Harlan Sur
(overweight, PT $110): Lam reported a strong set of results and issued positive CY25 wafer outlook. The
forecast reflects continued improving fundamentals driven by leading edge logic/foundry and advanced
memory.
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