Stock Market Update

Equity futures point to a slightly higher opening this morning after yesterday's broad-based modest retreat from record highs. Mega-cap and semiconductor names were among the prominent laggards after reports called into question Oracle's (ORCL 285.80, +1.56, +0.6%) gross margins in regard to its renting of NVIDIA (NVDA 186.34, +1.30, +0.7%) chips.

The U.S. government remains in shutdown mode, which has had little effect on the equity market but continues to prevent the release of some economic data points. The market is set to receive the FOMC minutes for the September meeting this afternoon, which saw broad support for the resulting 25-basis point rate cut. 

Bloomberg reports that the shutdown and lingering concerns around the state of the U.S. economy have driven gold prices to record-high levels, surpassing $4,000 per ounce for the first time. 

Macro developments remain relatively quiet this week amid the lack of data, though earnings reports will pick up substantially over the next week. 

The MBA Mortgage Applications Index for the week ended October 4 saw a decrease of 4.7%, from a prior decrease of 12.7%. 

In corporate news:

• The government shutdown is creating more air travel delays, according to Bloomberg.
• Apple (AAPL 255.95, -0.53, -0.2%) and Meta Platforms (META 712.75, -0.33, -0.0%) are nearing settlements with the EU on an antitrust case, according to The Financial Times.
• NVIDIA (NVDA 186.34, +1.30, +0.7%) is part of a $20 billion fundraising round in Elon Musk's xAI, according to Bloomberg. 
• Intel (INTC 37.08, -0.09, -0.2%) was downgraded to Reduce from Hold at HSBC with a target of $24.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Wednesday on a lower note while markets in China and South Korea were closed for holidays. Japan's Nikkei: -0.5%, Hong Kong's Hang Seng: -0.5%, China's Shanghai Composite: HOLIDAY, India's Sensex: -0.2%, South Korea's Kospi: HOLIDAY, Australia's ASX All Ordinaries: -0.1%.

In news:

• China's markets will reopen tomorrow while South Korea will be closed for one more day.
• Japan's real cash earnings were down for the eighth consecutive month in August, fueling speculation about a more gradual rate hike path.
• Reports related to Golden Week activity in China suggest that a lot of travel took place, but spending was restrained.
• The Reserve Bank of New Zealand lowered its official cash rate by 50 basis points to 2.50% against expectations for a 25-basis point cut. The new rate is slightly below the previously anticipated terminal rate of 2.55%.

In economic data:

• Japan's October Reuters Tankan Index 8 (last 13). August Overall Wage Income 1.5% yr/yr (expected 2.6%; last 3.4%). August Current Account surplus JPY2.46 trln (expected surplus of JPY2.45 trln; last surplus of JPY1.88 trln). September Economy Watcher Current Index 47.1 (expected 47.0; last 46.7)
• Australia's August Building Approvals -6.0% m/m, as expected (last -8.2%) and Private House Approvals -2.6% m/m, as expected (last 1.1%)

Major European indices trade in the green. STOXX Europe 600: +0.7%, Germany's DAX: +0.7%, U.K.'s FTSE 100: +0.9%, France's CAC 40: +0.9%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.6%.

In news:

• Germany reported a sharp drop in its Industrial Production for August (-4.3% m/m) after reporting an unexpected drop in Factory Orders yesterday (-0.8% m/m), underscoring the weak nature of the country's economic recovery.
• BMW lowered its outlook for the year due to weakness in China.
• European Central Bank policymakers Nagel, Rehn, and Escriva spoke about inflation being essentially on target at this time.

In economic data:

• Germany's August Industrial Production -4.3% m/m (expected -1.0%; last 1.3%); -4.2% yr/yr (last 1.5%)