US markets
US equities ended sharply lower amid risk-off sentiment on Wednesday. Treasury yields resumed their climb along with oil prices after a strike on a Gaza hospital dashed hopes for containing the Middle East conflict and complicated US President Joe Biden’s visit to the region. Investors also digested a slew of disappointing quarterly reports from companies, which dampened risk appetite further. The bellwether S&P 500 lost 1.3 percent, the tech-heavy NASDAQ sank 1.6 percent, and the blue-chip Dow Jones Industrial Average slid 1.0 percent.
Most of the S&P sectors ended in negative territory, with economically sensitive materials, industrials, consumer discretionary, real estate, and financials hit hardest. Conversely, energy stocks led the gains as crude prices climbed due to ongoing turmoil in the Middle East fueling supply-side concerns from oil-producing countries. On the corporate earnings front, electric vehicle maker Tesla tanked 4.8 percent, posting results that missed market expectations. Banking giant Morgan Stanley tumbled 6.8 percent as its third-quarter profit shrank due to a slowdown in investment banking activity. Consumer goods conglomerate Procter & Gamble gained 2.6 percent after its quarterly sales topped estimates. United Airlines plunged 9.7 percent after forecasting weaker fourth-quarter profit due to higher costs.
These price data reflect observations at market close: WTI spot crude oil rose by US$1.66 to US$88.32 while spot gold gained by US$15.25 to US$1,941.40. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose by 4 basis points to 4.99 percent while the 10-year note yield rose by 5 basis points to 4.90 percent.
European markets
European equities fell on Wednesday. Keeping market sentiment fragile were growing concerns over the Middle East conflict and hotter-than-expectation inflation data from the UK. The Europe-wide STOXX and the UK FTSE 100 slid 1.1 percent each, the German DAX shed 1.0 percent, and the French CAC closed 0.9 percent lower.
All the Europe-wide STOXX sectors participated in the selloff, with real estate, information technology, materials and industrials making up the worst performing group. Energy and consumer staples posted the least losses. Real estate stocks fell sharply amid worries that higher borrowing costs would curb demand. Moreover, hotter-than-expected inflation in the UK and robust economic figures in the US cemented the case for central banks to keep interest rates at elevated levels for a longer period. British housebuilder Barratt Developments dipped 5.1 percent after expressing an uncertain annual outlook given the challenging mortgage market conditions. Semiconductor shares came under pressure as chip equipment maker ASML Holding, down 3.4 percent, reported lower-than-expected orders and warned of flat sales next year. Adidas added 3.2 percent after the sportswear company hiked its full-year guidance and posted stronger-than-expected third-quarter earnings.
On the economic data front, the annual inflation rate in euro area was confirmed easing to a two-year low of 4.3 percent in September. Elsewhere, the annual inflation rate in the UK held steady at 6.7 percent in September, slightly higher than market expectations of a modest decline to 6.6 percent. The core inflation rate, which excludes volatile items such as energy and food, fell slightly less than expected to 6.1 percent, reaching its lowest point since January.
Asia Pacific markets
Asian markets closed mixed on Wednesday. The ongoing military clashes in the Middle East and higher bond yields across global markets dented risk appetite, while positive Chinese economic data provided some comfort to investors.
Mainland China’s equities retreated, as a slew of upbeat economic data gave way to geopolitical risks related to the widened US chip export ban. China’s CSI 300 and the Shanghai index both dropped 0.8 percent. The country’s third-quarter GDP growth rate, as well as September retail sales, industrial production and unemployment rate all came in better than expected. Nonetheless, artificial intelligence (AI) stocks, especially companies related to NVIDIA, slid after the US chipmaker warned of product snags from tightening US restrictions on the sale of chips to China. Weight-Loss drugs fell on news that Brightgene Bio-Medical Technology, down 3.0 percent, received warnings from the security regulator regarding the narrative that its chairman had lost 15 kilograms after trying out its homegrown weight-loss injection. Hong Kong equities edged lower after seesawing around the flatline throughout the session, with the Hang Seng index closing down 0.2 percent. Property developer Country Garden Holdings signalled a first-ever default as it wouldn’t be able to meet all of its offshore payments due to subdued sales.
Japanese stocks held onto gains from the last session with modest gains. The Nikkei index settled slightly higher, while the broader TOPIX closed up 0.1 percent. Energy stocks outperformed as fears of a wider conflict in the Middle East drove oil prices higher. Oil explorer Inpex advanced 4.5 percent, and Japan Petroleum Exploration jumped 2.5 percent. Banks were among other top performers as investors expected to see higher profits from rising Japanese bond yields. Mizuho Financial Group climbed 2.1 percent, and Mitsubishi UFJ Financial Group gained 1.3 percent.
Taiwan’s TAIEX lost 1.2 percent. South Korea’s KOSPI edged up 0.1 percent. Indian equities gave back yesterday’s gains, with the BSE Sensex down 0.8 percent.
Australian shares rose for a second straight session, with the All Ordinaries index up 0.3 percent, led by mining and energy stocks. However, Reserve Bank of Australia governor Michele Bullock warned that the central bank might have to further tighten monetary policy if inflation does not slow as hoped. Energy shares led the gains due to rising oil prices, with Woodside Energy Group up 2.2 percent and Santos up 1.9 percent. Mining stocks improved on encouraging Chinese economic data. Conversely, technology stocks tracked their US peers lower.