U.S. Markets Surge Led by Tesla’s Record Rally
On Thursday, U.S. stock markets experienced a boost, propelled by a historic 22% surge in Tesla shares—the highest one-day gain since 2013. Strong earnings from American Airlines and T-Mobile supported the consumer discretionary and technology sectors. However, mixed results from Honeywell and IBM caused the Dow Jones Industrial Average to slip by 140.59 points, reflecting caution in the industrial sector.
Key Highlights:
- Tesla’s Performance: Tesla’s stock soared after CEO Elon Musk projected 20%-30% sales growth for next year and teased a cost-efficient model by 2025. Reduced production costs and optimism around Full Self-Driving (FSD) technology contributed to this surge, adding approximately $150 billion to Tesla’s market value.
- Airlines and Telecommunications: American Airlines and T-Mobile reported positive earnings, helping the consumer and tech sectors rally.
European Stocks: Luxury Sector Lifts the Stoxx 50
European stocks closed marginally higher on Thursday, with the Stoxx 50 rising by 0.3%. This boost was largely due to Hermès, which reported impressive third-quarter sales, driving up shares in the luxury sector. Despite this gain, some sectors remained cautious amid mixed global cues.
Key Highlights:
- Hermès’ Strong Sales: Hermès reported an 11.3% revenue increase, with robust growth in EMEA and the Americas, offsetting slower sales in China. This helped bolster confidence in the European luxury market.
- Outlook: Earnings reports and a recent European Central Bank rate cut are expected to support gains, with the technology and healthcare sectors projected to see more activity.
Asian Markets: Mixed Reactions Amid Pre-Election Jitters
Friday trading in Asia saw mixed results, with Japan’s Nikkei 225 declining by 1.1%, as yen volatility and pre-election uncertainty weighed on investor sentiment. Broader markets remained rangebound, with a potential for weekly declines. China’s indices saw mild gains following steady interest rates, and Hong Kong’s Hang Seng led the region’s performance with strong gains.
Key Highlights:
- Japan’s Decline: Political uncertainty and currency volatility affected Japan’s Nikkei 225, as investors feared potential government intervention following weak inflation data.
- Hong Kong and China: The Hang Seng Index led gains as China maintained stable policy rates. Investors await further economic support measures from Beijing in November.
- Australia, South Korea, and India: Australia’s ASX 200 and South Korea’s KOSPI saw slight gains, while India’s Nifty 50 remained under pressure amid challenging economic indicators.
Oil Prices Climb Amid Middle East Tensions
Oil prices continued their upward trend in Asian trading on Friday, driven by supply concerns related to escalating Middle East tensions. Brent and WTI futures both rose between 1%-2%, despite increased U.S. inventories and a strengthening dollar. Uncertainty around Chinese demand persists as markets await possible fiscal stimulus announcements from Beijing in November.
Corporate and Economic Updates
- Apple vs. Huawei: Apple’s iPhone sales in China dropped slightly by 0.3% in Q3, while Huawei surged 42% year-on-year, thanks to its Mate 60 and Pura 70 models. Huawei now holds a 15.3% market share, close to Apple’s 15.6%, reflecting intensified competition.
- Tapestry-Capri Merger Blocked: A U.S. judge halted the $8.5 billion merger between Tapestry and Capri, citing potential competition concerns. Capri’s shares fell by 47% after the ruling, while Tapestry’s rose by 13%.
- Siemens Eyes Software Expansion: Siemens AG is reportedly exploring an acquisition of Altair Engineering to enhance its software division. Discussions are ongoing with no final decision made, and other potential buyers may also emerge, though analysts note this could slightly impact earnings due to Altair’s high valuation.
Additional Market Movements
- Barclays Earnings: Barclays reported a 23% increase in attributable profits, reaching £1.6 billion in Q3, bolstered by strong UK net interest income. The bank’s cost-to-income ratio remains steady at 61%.
- Renault Gains: Renault exceeded its Q3 sales forecast, reporting €10.7 billion and maintaining full-year guidance amid strong demand.
- Valero’s Q3 Profit Drop: Valero Energy’s Q3 profit fell by 86% due to weaker demand in China, though renewable diesel sales helped revenue grow to $32.87 billion.
Market Sentiment and Future Outlook
U.S. futures are steady as investors anticipate major tech earnings next week. While Tesla’s rally provided a recent boost, concerns about the upcoming U.S. election, delayed rate cuts, and geopolitical issues have added caution. HSBC raised its S&P 500 year-end target to 5,900, noting a favorable economic outlook with easing inflation and strong GDP growth, though it warned of risks associated with upcoming elections and geopolitical tensions.
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