Overnight US Stock Market | All Three Major Indices Closed Lower; Western Digital (WDC.US) Dropped Nearly 3%; Spot Gold Fell Below the $4000 Mark

According to Zhihu Finance APP, on Friday, the three major indices closed lower. Rising oil prices continued to put pressure on the stock market. U.S. President Trump stated that the U.S. may soon end the war with Iran. He claimed that America has the capacity to control all Iranian oil resources, is currently shipping the necessary oil, and declared that the Strait of Hormuz is "completely under my control"; he also claimed the U.S. has the ability to take over all of Iran. In addition, Trump revealed that the U.S. is close to reaching a trade agreement with Mexico, and Canada is also actively seeking to reach an agreement with America.

[U.S. Stocks] At the close, the Dow fell 652.82 points, or 1.23%, to 52,215.16 points, up 0.41% for the week; the S&P 500 fell 39.75 points, or 0.52%, to 7,623.68 points, down 0.47% for the week; the Nasdaq fell 53.51 points, or 0.21%, to 25,955.34 points, down 0.71% for the week. Western Digital (WDC.US) fell 2.97%, Google (GOOG.US) fell 1.24%, SanDisk (SNDK.US) fell 1.82%, Meta Platforms (META.US) fell 0.96%, Apple (AAPL.US) fell 0.14%; SK Hynix (SKHY.US) rose 4.05%, Micron Technology (MU.US) rose 2.46%. The Nasdaq Golden Dragon China Index fell 0.84%.

[European Stocks] The German DAX30 Index fell 201.19 points, or 0.79%, to 25,170.56; the UK FTSE 100 fell 42.69 points, or 0.40%, to 10,682.34; the French CAC40 fell 28.44 points, or 0.36%, to 7,782.82; the Euro Stoxx 50 fell 21.86 points, or 0.36%, to 6,065.15; Spain's IBEX35 rose 80.82 points, or 0.43%, to 18,994.32; Italy's FTSE MIB rose 160.84 points, or 0.33%, to 48,544.50.

[Forex] The U.S. Dollar Index rose on the 23rd. The dollar index, which tracks the dollar against six major currencies, rose 0.2% to 101.811 at the close of the forex market. By the close in New York, 1 euro exchanged for 1.1193 U.S. dollars, down from 1.1220 the previous day; 1 pound exchanged for 1.3371 U.S. dollars, down from 1.3400 the previous day. 1 U.S. dollar exchanged for 156.87 yen, up from 156.78 the previous day; 1 U.S. dollar exchanged for 0.8252 Swiss francs, up from 0.8205 the previous day; 1 U.S. dollar exchanged for 1.4004 Canadian dollars, down from 1.4008 the previous day; 1 U.S. dollar exchanged for 9.9424 Swedish krona, up from 9.9079 the previous day. As of the week ending October 20, net short positions held by leveraged funds in the euro rose by 1,305 contracts to 94,100 contracts, the highest level since March 2020, corresponding to bearish bets of around 11.8 billion euros. Political turmoil in France, debt pressures, and increased protests have exacerbated market concerns and weighed on the euro. Investors are also worried about slowing European economic growth, limited room for ECB rate hikes, and a possible widening euro-U.S. interest rate differential. The euro weakened again against the dollar this week, down 0.4% cumulatively.

[Cryptocurrency] Bitcoin edged down, last trading at $81,234.67; Ethereum edged up 0.56% to $2,395.73.

[Precious Metals] Spot gold dropped 0.71% and fell below the $4,000 mark to $3,997.08/oz; spot silver fell over 1% to $53.936/oz.

[Crude Oil] At the close of the day, December delivery light crude oil futures on the New York Mercantile Exchange rose $3.80, closing at $103.27 per barrel, up 3.82%. December delivery Brent crude futures rose $3.55 to close at $116.72 per barrel, up 3.14%.

[Macro News]

Trump Administration Cancels 50% Tariffs on Some Canadian Goods, Imposes New Tariffs on Others. According to reports, the U.S. government announced on Friday an exemption of 50% tariffs on some Canadian imports, including blueberries, potatoes, apples, seaweed, as well as plastic containers, packaging materials, refrigeration equipment, and packing machinery, tariffs that had been implemented after the collapse of U.S.-Canada trade talks in late August. The White House simultaneously imposed tariffs on certain valves, carpets, and waste products to offset part of the tariff cuts. Susan Collins, Republican Senator from Maine, said she had secured new tariff exemptions for the local agriculture sector. Democratic Senate candidate Troy Jackson criticized that Trump’s trade war had raised living costs for Maine residents and that while Collins had previously supported these policies, she was now seeking votes with tariff exemptions. This adjustment comes ahead of the U.S. midterm elections on November 3. Polls show Democrats are favored to win a majority in both houses of Congress, and Republican candidates in places like Michigan are publicly demanding an end to the trade war with Canada. The White House stated this adjustment aims to further clarify the scope of Canadian tariff application.

U.S. Consumer Sentiment Falls to Five-Month Low Due to Inflation Concerns. In October, the U.S. consumer sentiment index fell slightly due to rising prices and interest rates, hitting a five-month low. According to a survey released Friday, the University of Michigan’s final consumer sentiment index fell from 48.1 in September to 48. Although higher than the preliminary reading and economists’ estimates, consumers expect prices to rise 4.7% over the next year, up from 4.6% last month, and forecast costs to rise at a 3.5% average annual rate over the next five to ten years, both the highest since May. Survey director Joanne Hsu said, “After five consecutive years of inflation above the target level, both short-term and long-term inflation expectations have risen in recent months, exposing the risk that elevated inflation expectations may be deeply entrenched.” She added, “Consumers of all political stripes uniformly consider inflation to be a much greater risk to the economy in the coming year than unemployment.”

The U.S. Economy Remains Robust at the Start of Q4. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said: “Initial PMI data for October show the U.S. economy continuing to expand strongly at the start of the fourth quarter. The survey’s output data is consistent with a 5% annualized GDP growth trend, previously expected to grow by 4% in Q3. Corporate profits are especially strong, and as companies expand capacity to meet stronger customer demand, hiring has increased significantly. Excluding the post-pandemic rebound, the growth achieved by U.S. businesses in recent months is the best since early 2015. However, cost pressures remain a major concern, especially as rising crude prices once again impact all kinds of goods and services. Meanwhile, supply chain bottlenecks have worsened, backlogs of orders keep rising, making it easier for businesses to pass higher costs on to consumers. The result has been the sharpest rise in selling prices in four years, and this trend suggests consumer price inflation could further exceed the Federal Reserve’s target in the coming months.”

Canadian Retail Recovery Expected to Continue in September. Canadian retail spending is expected to remain on a growth trajectory in September, although possibly at a slower pace than in August. Preliminary data from Statistics Canada show retail sales rose 0.7% year-on-year in September. In August, driven by growth in all nine sub-sectors, retail sales grew by 1.2%. Sales by volume also rose by 1.2% in August. Given the escalation of the trade war with the U.S. in September, economists had previously warned that the August rebound might be temporary. The Canadian economy seems to have overcome a tariff-induced slump in Q2, but GDP growth rates in July and August flattened. Retail data is the last piece of information available to Bank of Canada policymakers regarding the state of the Canadian economy ahead of next week’s interest rate decision. Over the past week, several traders and economists have changed their positions and are now betting on a rate hike. Overnight swaps traders have pushed the probability of a hike at next week’s meeting above 80%.

[Individual Stocks]

Media: SpaceX and Tesla Merger May Face Antitrust Scrutiny. According to reports, Elon Musk raised the proposal to merge Tesla (TSLA.US) and SpaceX (SPCX.US) this week. A former Justice Department official said the risk of antitrust concerns is a real one. The official observed that antitrust regulators see such "vertical" mergers as promoting competition, as they improve supply chain efficiency; but if Tesla-SpaceX is considered a "vertical exclusionary" merger, regulators may try to block it. The official explained that "exclusionary" refers to companies using their position to limit competition at other levels of their supply chain. In such a scenario, if only Tesla cars could use SpaceX’s Starlink technology in the future, other self-driving or electric vehicle makers could be disadvantaged. Of course, this depends on the terms of what is currently a hypothetical deal. It also depends on how willing antitrust enforcers, whose positions align with Trump, are to clash with Elon Musk—a major donor to the Republicans. Nevertheless, if Democrats regain control of the House next month, Musk will face congressional investigations, and lawmakers will closely scrutinize any such attempt by him to merge his companies.

[Major Bank Ratings]

UBS Group: Raised Blackstone Group (BX.US) target price from $116 to $118; raised Lockheed Martin (LMT.US) target price from $653 to $692

Mizuho Bank: Lowered Western Digital (WDC.US) target price from $590 to $490; raised Meta Platforms (META.US) target price from $750 to $950