US stocks rebounded sharply on the first trading day of October as bond yields declined, while the dollar index retreated further from last week's peak. Crude oil jumped 4.8% amid expectations for a substantial output cut by OPEC+ later this week. And the UK’s new Prime Minister Liz Truss reverses the recent proposal of a tax rate cut for the high-income group. It seems all actions were coming together to defend against market turmoil from a skyrocketed US dollar, which triggered the reversal of trades in risk assets. However, volatilities may remain high in the new month amid growing uncertainties as the fear gauge, CBOE VIX stayed above 30.Click to enlarge the table
- Dow rose 765 points after dipping into a bear market last week. Dow was up 2.59%, S&P 500 advanced 2.59%, and Nasdaq rose 2.27%. All 11 sectors in the S&P 500 finished higher, with energy leading gains on a jump in the oil prices. Devon Energy surged 8.7%, and Exxon Mobil was up 5%. All the mega-cap companies but Tesla performed strongly, up between 2-3%.
- Tesla Motors' shares plummeted 8.6% due to a miss on the delivery number for the third quarter. Due to the supply-chain woes, the EV marker delivered 343,830 electric vehicles, shy of an estimate of 358,000, though it still has a 35% growth from 254,695 a year ago, which is also a record number.
- Credit Suisse’s shares plunged 12% to a record low before paring losses on debt default concerns. The largest Europe bank’s 5-year CDS spread spiked to 249 bps on 30 September, the highest seen in 2009, which sparked concerns over capital and liquidity ahead of its restructuring.
- UK scraps the 45% tax cut proposal for the highest earners that has been announced one week ago to stabilise the Pound and the bond markets. The British Pound rose 1.37% to 1.1323 on AEST 8 am this morning as the UK 10-year gilt yield tumbled to 3.94% from 4.07%.
- Asian markets are set to open higher following the broad-based rally on Wall Street. ASX futures were up 1.58%. Nikkei 225 futures rose 1.41% and Hang Seng Index advanced 1.54%. The NZX 50 jumped 1.22% at the open.
- RBA is set to hike the rate by 50 basis points for the fifth consecutive time, which will take the cash rate to 2.85%. However, investors see a peak of hawkishness in the Reserve Bank, which may start pivoting in its monetary policy at this meeting. The RBNZ is also poised for the fifth 50 bps rate hike by Wednesday.
- WTI futures surged near 5% on a potential output cut by OPEC+. The cartel considered cutting production by more than 1 million barrels per day amid a deteriorated demand outlook, which will be the biggest output reduction since 2020. The group will meet on Wednesday.
- Silver surged 9% on a decline in bond yields, and a softened dollar. Gold futures rose 2% to above the key resistance level of $1,700, and silver surged 9% to above $20 per ounce.