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Stocks fall on risk-off as oil and gold continue to surge, Tesla sheds 10%

Fed Powell

Wall Street extended losses as risk-off continued to dominate the market movements, with the VIX spiking 11% to above 21 for the first time since May. The US 10-year bond yields jumped 8 basis points to 4.98% following Fed Chair Powell’s speech. The Fed boss signalled another possible rate hike if the economy proves further resilience but will approach carefully. However, Fed funds futures contracts priced in little chance for another rate hike within this year as the 2-year Treasury yield fell 6 basis points, sending the US dollar lower.

The US tech earnings are painting a mixed picture so far. Tesla’s shares shed 10% following CEO Elon Musk’s disappointing comments on the Cybertruck’s delivery, while Netflix soared 17% on the surprising jump in the net subscriber growth. However, the tech home, Nasdaq, posted a three-day losing streak due to the macro headwinds.

In commodities, the Hamas-Israel war lifted gold and oil further amid the geopolitical tensions. The Comex gold futures were up 1% to a two-month high of nearly US$1990 per ounce, and the Nymex WTI futures jumped 2.4% to above US$90 per barrel, putting upside pressure on inflation.  

Spiking US bond yields may continue to press equity markets in the Asia-Pacific region as futures point to a lower open. The Nikkei 225 futures fell 0.51%, the ASX 200 futures slumped 0.83%, and Hang Seng Index futures were down 0.18%.

Price movers:

  • 10 out of 11 sectors in the S&P 500 finished lower, with Consumer Discretionary and Real Estate, leading losses, down 2.2% and 2.44%, respectively. Communication Services was the only sector that finished in the red, up 0.33%.  
  • Netflix’s shares soared 17% amid its earnings beat. The streamer added 8.8 million subscribers in the third quarter, the highest growth since the second quarter of 2020. It raises prices and expects the profit margin to be about 20% for 2023.
  • Tesla’s shares tumbled 10% as Elon tempered expectations for the Cybertruck delivery date and profitability. He said Cybertruck’s mass production may not happen until 2024 and expects that it will take 12 to 18 months before it brings significant cash flow.
  • Gold surged for the second straight trading day on risk-off and softened USD. Spot gold rose 1.4% to 1,974, the highest since July. Further resistance can be found at 2,000 if the precious metal tops the current resistance level.  
  • Crude oil rose to a one-month high amid geopolitical tensions. WTI future may approach US$95 per barrel, while Brent futures may advance to the 100-mark from a technical perspective. 

Today’s agenda:

  • China’s 1-year and 5-year Loan Prime Rate

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