Powell suggests the Fed will hold rates

US equities fell a third-straight day, sending the S&P 500 Index and the Nasdaq Composite to two-week lows as the 10-year Treasury yield extended a climb to within an eyelash of the 5% mark.  IN an address at the Economic Club of New York, Federal Reserve chair Jerome Powell reinforced the likelihood the central bank will maintain elevated interest rates for some time to come.  The S&P 500 was down 0.9%, the Dow Jones Industrial dropped 0.8%, while the Nasdaq Composite fell 1.0%.   In Europe, the DAX 40 declined by 0.3% while the Euro Stoxx 50 slid 0.4%, both reaching seven-month lows. 

Summary for 20.10.2023 

• Asian equities extended steep losses on Friday as a rout in global bond markets continued to decimate risk appetite, while traders remained on edge over any more escalation in the Israel-Hamas war.  Investors also assessed data showing Japan’s headline inflation rate fell to a one-year low of 3% in September, while the core inflation rate slowed to a 13-month low of 2.8%.  Shares in Australia, Japan, South Korea, Hong Kong and China all declined. 
• European shares are set to follow Asia lower while US equity futures are also called lower as a rally in Treasury yields continues to pressure equities. 
• Oil prices rose sharply in Asia this morning, extending a strong run of gains after US government outlined plans to begin refiling the country’s strategic oil reserve, while concerns over supply disruptions in the Middle East also lent support.  The Department of Energy announced offers totalling 6 million barrels to be delivered between December this year and January 2024, as the Biden administration sought to begin refilling the heavily-drawn Strategic Petroleum Reserve. 

• In an address at the Economic Club of New York, Federal Reserve chair Jerome Powell reinforced the likelihood the central bank will maintain elevated interest rates for some time to come.  He acknowledged price pressures have receded, but said the Fed still has a way to go to bring inflation down sustainably to its long-term target.   
• Joe Biden appealed directly to Americans to support funding for Israel and Ukraine’s war efforts, warning that Hamas and Russia pose parallel threats to US democracy.  The US is seeing stepped-up drone attacks in Iraq and Syria, while an American destroyer in the Red Sea intercepted cruise missiles and drones fired toward Israel by Houthi rebels in Yemen. 
• The GfK Consumer Confidence indicator in the UK fell sharply to –30 in October from –21 in September, defying expectations for a slight improvement to –20 as the high cost of living and economic uncertainties weighed on sentiment.  October’s reading was also the lowest in three months, with all the five components that make up the index showing declines. 
• American Airlines shares gained 0.8% yesterday despite reporting mixed quarterly results, including a net loss of $545 million.  The equity is still down nearly 40% from a mid-July peak, sinking with other airline shares amid concerns high oil prices would pinch profits. 
• Blackstone shares fell 7.9% Thursday after the asset manager’s quarterly earnings and revenue missed expectations. 

• Union Pacific shares rose 2.1% after the railroad operator reported third-quarter earnings per share of $2.51, about 7 cents above expectations, though revenue of $5.94 billion was slightly under forecasts. 
• AT&T shares jumped 6.6% after the telecommunications company’s quarterly earnings and revenue surpassed forecasts. 
• Tesla has increased the price of its Model X Plaid all-wheel drive to $94,990 from $89,990 in the US yesterday.  This comes a day after CEO Elon Musk said Tesla had managed to maintain demand with a series of price cuts but added he was concerned that rising interest rates would make cars unaffordable. 
• Renault saw its share price tumble by 7.5% on Thursday after reporting third-quarter revenue that fell short of market expectations.  Despite the disappointing top-line result, the company maintained a positive outlook on its ongoing structural improvements and reaffirmed its financial guidance for 2023. 
• Nokia announced on Thursday it plans to cut 14,000 jobs, equivalent to 16% of its workforce over the next three years.  The move is part of an extensive restructuring effort aimed at reducing costs by $1.3 billion amid a 20% sales decline and a staggering 69% drop in profits.