Current reporting from the world’s leading markets: the important updates, prominent stocks, bonds and analyst updates
23:00 – Wall Street was locked in the red after the market expected the Fed to continue an aggressive interest rate policy following a drop in the US unemployment rate: the Nasdaq fell 3.8%, the Dow Jones lost 2.1%, and the S&P 500 weakened 2.8%. Today’s declines offset the weekly gains in the leading indices to 0.8%, 2% and 1.5% respectively.
Chip stocks recorded sharp declines after AMD issued a profit warning and lost 13.8%, as well as new US restrictions on technology exports to China (see early report). Nvidia weakened by 8%. Other technology stocks also suffered: Tesla lost 6.3% , Microsoft – 5.1% and Amazon – 4.8%.
At the same time, bond yields soared, and the yield on the 10-year US government bond recorded the longest streak of weekly increases since 1977, when it comes to the tenth week of increases. Today, the yield added 6 points to 3.883%, for a weekly total of 8.1 points.
21:35 – WTI oil rose today for the fifth time in a row – by 4.7% – to the level of 92.6 dollars per barrel, completing a jump of 16.5% this week. This is mainly due to the output cut announced by the OPEC+ companies despite the strong opposition of the USA to this. Brent rose by 3.7% to $97.9 per barrel, a record high since August 30, and added 155 this week. Natural gas weakened by 3.2% to $6.7 per unit, with a weekly decline of 0.3%.
20:35 – Gold registered a daily decrease of 0.7% ($11.50) to a price of $1,709.30 per ounce. In the background, a daily increase in US bond yields and the value of the dollar compared to the basket of the 6 main currencies. But in a weekly summary, the price of the precious metal rose by 2.2%, the second week in a row of increases.
19:50 – The pressure on Wall Street is increasing as investors digest the employment data, which indicate an increasing chance that the Fed will raise interest rates by 75 basis points at the next decision in early November.
The Fed has already raised the interest rate by 0.75% three times in a row, and it stands at 3.25%-3.50%. New York Fed President John Williams said earlier that the bank is expected to raise it in the coming months to around 4.5% depending on the conditions in the economy, when the consumer price index will be published next Thursday (see early update).
In the meantime, the declines of the chip maker continue after AMD cut forecasts and falls by 11%, Marvel dives by 10% and Nvidia deletes 7%. Apart from AMD’s forecasts, new and strict guidelines from the US authorities, which limit the export of chips and artificial technology to China, also affect the sector.
6:55 p.m. – European stock markets closed lower under the influence of Wall Street and the US monthly employment report: the German DAX retreated by 1.6%, the British FTSE was cut by 0.1% and the French CAC lost 1.2%. Credit Suisse jumped by 5.4% on the Zurich Stock Exchange, The bank buys back bonds in the amount of 3 billion dollars and realizes real estate assets.
18:15 – First reaction of a Fed senior official after the employment report which indicates, among other things, a return to the low in the unemployment rate of 3.5%: The President of the Federal Reserve Bank of New York John Williams said that the interest rate in the economy should be raised to around 4.5% during the coming months, although the pace of the interest rate increase depends in the economic performance (the employment market, the price index).
The goal is to return inflation to the 2% target,” said the president of the New York Fed. Williams also serves as vice chairman of the Open Market Committee which decides on the interest rate.
17:05 – “While the data on the addition of jobs was almost as expected, the decrease in the unemployment rate attracted the attention of the market, because of what it means for the Federal Reserve”, according to Peter Boockvar, head of investments at the investment consulting company Bleakley Financial. According to him, “when you add to today’s data the low number of unemployment claims, it pushes the Fed to continue aggressively with the aggressive interest rate hikes.”
16:30 – Wall Street opens down after the US monthly employment report: Dow Jones retreats 1.2%, S&P 500 cuts 1.4% and Nasdaq wipes 1.9%. The US 10-year bond yield jumps 7 basis points to 3.89%. Shares of chipmaker AMD are falling 6% after reporting that it is cutting its sales forecast for the rest of the year.
16:00 – Contracts on Nasdaq retreated by almost 2%, with a sharp increase in US bond yields in the background, as investors expect sharp interest rate hikes to continue. The bond yield reflects the market’s expectations for the interest rate in the economy.
The employment report of September, with a decrease in unemployment and job additions slightly lower than the forecasts, is expected to allow Fed Goshpanka to continue with the aggressive interest rate policy. The yield on the US 10-year bond jumps by 8 basis points to a rate of 3.90%, the yield on the two-year bond jumps to 4.30%.
14:50 – The stock of the chip manufacturer AMD falls by 6% pre-market in New York after it published a preliminary report for its results in the third quarter. The company reported that it cut its sales forecasts for the rest of the year. In the background, a surprising drop in computer sales that hurts a company that is considered one of the largest chip manufacturers in the US. The market value of Advanced Micro Devices is 109 billion dollars.
13:55 – The contracts on the stock index in the New York stock exchanges are in slight movements ahead of the monthly employment report in the US (to be published at 3:30 p.m. Israel time): market economists expect an increase of 275,000 new jobs in the American economy in September, a decrease compared to August, when an increase of 315,000 jobs was recorded The unemployment rate is expected to remain at 3.7% according to forecasts.
The US Federal Bank plans to continue the sharp interest rate hikes (the next interest rate decision in early November), and better data than forecasts will allow the bank more legitimacy to continue the aggressive policy against inflation, through sharp interest rate hikes – which stands at 3.25%-3.50%.
But worse-than-expected employment data may lead Fed officials to take a step back from hawkish policy. A booming job market is one of the main causes of the price increases against which the Federal Bank is fighting through interest rate hikes.
In the last 12 months, inflation in the US jumped by 8.3%, while the Fed’s goal is to bring it down to 2%. For this, among other things, it is necessary to harm employment in the American economy, as recession is not a dirty word for some Fed officials.
Good data from today’s forecasts may lead to declines in stock indices on Wall Street, since investors will expect the Fed’s aggressive interest rate policy to continue. A little over an hour before the publication of the report – the 10-year US bond yield rises by 2 basis points to 3.84%, the yield on the 2-year bond is 4.28%. The dollar registers slight declines compared to the leading currencies. Gold retreated slightly by 0.2% to a price of $1,717.20 per ounce.
12:15 – Trade in Europe moved to slight increases. Putsy, Kak and Dax climb about 0.1%.
10:20 – Trading in Europe opened with slight declines. Potsi in London and Cac in Paris lose 0.2%, Dax in Frankfurt falls by 0.3%.
10:05 – Industrial production in Germany decreased by 0.8% in August compared to the previous month – according to official data published today. Analysts were expecting a 0.5% drop. The figure for July was updated upwards from minus 0.3% to 0%.
09:45 – The Swiss bank Credit Suisse, which is undergoing a severe upheaval, has offered to buy back bonds worth up to 3 billion Swiss francs ($3.03 billion), in an effort to navigate between the falling stock price and an increase in bets against the debt. According to a report on the CNBC website, Credit Suisse is also considering selling the Savoy Hotel in Zurich’s financial district, so there is growing speculation that the bank is looking for ways to increase liquidity.
08:00 – A negative trend was recorded in the stock markets in Asia this morning, following the declines recorded yesterday on Wall Street, and in anticipation of the employment report for September that will be published today in the US (3:30 p.m. Israel time) and which may give an indication of the continuation of the Federal Reserve’s interest rate cuts. The analysts expect an addition of 275 thousand jobs, and an unemployment rate of 3.7% (unchanged from August).
In Hong Kong, the Hang Seng index falls by 1.1% (technology shares lose 2.8%), Nikkei in Tokyo sheds 0.6% of its value, the stock market in Australia loses 0.6%, and Kospi in Korea is stable. The stock markets in China are closed for a holiday. The MSCI Asia-Pacific index, which excludes stocks in Japan, is down about 1%.
As mentioned, last night Wall Street was locked in price declines for the second day in a row: the Dow Jones weakened by 1.2%, the S&P 500 retreated by 1% and the Nasdaq fell by 0.7%. In the background of yesterday’s declines, the words of the Fed President in Minneapolis can be noted , Neil Kashkari, who downplayed the possibility that the central bank will stop the plan of aggressive interest rate hikes. According to him, the Fed has “more work to do on the matter”.