Non-farm payrolls boost Dow to new high, Chinese concept stocks up 3% for the week, US bonds plunge, oil prices surge over 9% for the week

The U.S. September non-farm payrolls exceeded expectations, increasing by 254,000, the highest in six months. The revisions for July and August were raised by 72,000, and the unemployment rate unexpectedly dropped to 4.1%, confirming the expectation of a healthy soft landing for the economy. This also led traders and investment banks to cancel their bets on a significant rate cut in November.

Some traders even worry that the Fed's rate cut in November may be less than 25 basis points. "New Fed News" stated that the September non-farm payrolls may close the door to a 50 basis point rate cut in November, making a 25 basis point cut more likely.

The data caused the U.S. dollar index to rise by over 60 points in the short term, breaking through 102 to a seven-week high. Spot gold fell below $2630, U.S. stock futures jumped before the market opened, U.S. bonds fell sharply, and yields rose across the board by double digits. The two-year U.S. bond yield surged by 20 basis points to a six-month high. Traders' expectations for the Fed's rate cuts in the next four meetings are less than 100 basis points, and bets on rate cuts in Europe and the UK have been reduced.

According to CCTV News, the EU voted to pass the final ruling draft of the anti-subsidy case for electric cars, imposing additional tariffs on Chinese electric cars, with Germany leading strong opposition. However, the European automotive sector rose by more than 2%, with Volvo, Volkswagen, and Renault's European stocks all rising by about 3%.

The market continues to focus on tensions in the Middle East, with oil prices rising for four consecutive days and gaining over 9% for the week. U.S. President Biden stated that he is considering sanctioning Iranian oil, causing oil prices to give back a 2% gain earlier. Goldman Sachs stated that if an Israeli attack leads to a reduction of 1 million barrels per day in Iranian oil production for a period of time, oil prices could soar by $10 to $20 per barrel. Another analysis suggests that if conflicts escalate over the weekend, gold futures could easily rise to $2700 or even reach new highs.

On Friday, October 4th, boosted by expectations of an economic soft landing, U.S. stocks opened higher across the board, with Chinese and technology stocks leading the gains. The Dow rose by over 230 points at the opening, the Nasdaq rose by over 1%, small-cap indices rose by 1.5%, significantly outperforming the 2.4% rise in the Chinese concept index. Subsequently, U.S. stocks continued to rise and closed at daily highs, with the Dow rising by over 340 points to a new high, Tesla up nearly 4%, AMD up nearly 5%, the Chinese concept index up over 3%, and rising nearly 12% for the week:

• U.S. stock indices rose across the board. The S&P 500 index closed up 51.13 points, or 0.90%, at 5751.07 points. The Dow, closely related to the economic cycle, closed up 341.16 points, or 0.81%, at 42352.75 points. The tech-heavy Nasdaq closed up 219.37 points, or 1.22%, at 18137.85 points. The Nasdaq 100 rose by 1.22%. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of Nasdaq 100 tech stocks, closed up 1.24%. The Russell 2000 small-cap index, more sensitive to the economic cycle, closed up 1.50%. The VIX fear index fell by nearly 7% to below 20

• The S&P 500 rose 0.2% for the week, with the Dow slightly up, the Nasdaq up 0.1%, the chip index down 0.2%, and the small-cap index down 0.6%. The S&P energy sector surged over 7% for the best performance in nearly two years. The Nasdaq Golden Dragon China Index rose over 3%, leading the way, closing above the 8000-point psychological barrier for the first time since February 1, 2023, up nearly 12% for the week and rising for four consecutive weeks, with a cumulative increase of 36.77% since the close on September 23.

• US industry ETFs generally rose, with airline industry ETFs leading the way with a gain of over 3.3%. Global airline industry ETFs rose by 3.34%, internet stock index ETFs and regional bank ETFs rose by over 2%, banking ETFs, financial ETFs, semiconductor ETFs, consumer discretionary ETFs, and technology industry ETFs rose by 1.85%-1.11%, while utility ETFs fell by 0.16%.

• In terms of research strategy, citing data from EPFR Global, Bank of America stated that as of the week ending October 3, the recent inflows into China equity funds and global emerging market equity funds reached historical highs of $13.9 billion and $15.5 billion, respectively. Investors flocked to large-cap Chinese ETFs, with $1.4 billion flowing into the iShares China Large-Cap ETF (FXI) on Thursday, more than doubling the previous historical record.

• The "Tech Seven Sisters" saw only Microsoft decline, while Meta hit a new high. Apple rose by 0.5%, NVIDIA by 1.7%, Tesla by 3.9%, Microsoft down by 0.12%, Google Class A up by 0.7%, Meta up by 2.3%, and Amazon up by 2.5%.

• On the news front, Apple is expected to launch the iPhone SE 4 with Apple's self-developed 5G Modem in spring next year. This model will feature an OLED screen for the first time, with a price range of $459 to $499. Ahead of OpenAI, Meta introduced Meta Movie GenSora, which can create high-definition long videos with different aspect ratios and many features that Sora does not have, such as generating matching background music and sound effects, editing videos based on text instructions, and creating personalized videos based on user-uploaded images. Morgan Stanley believes that if Amazon adopts Rivian electric trucks and autonomous driving technology for medium-distance transportation and abandons internal combustion engine trucks, it could save over $20 billion annually

• Chip stocks rise together. The Philadelphia Semiconductor Index rose by 1.6% but fell by 0.2% for the whole week. The industry ETF SOXX closed up by 1.4%; NVIDIA's double long ETF rose by 3.3%. Intel rose by 1.5%, TSMC ADR rose by 0.9%, Broadcom rose by 2.8%, Arm Holdings rose by 1.7%, Micron Technology rose by 0.4%, Applied Materials rose by 1.2%, ASML ADR slightly rose, KLA rose by 1.7%, AMD rose by 4.9%, Qualcomm slightly fell.

• AI concept stocks rise more than fall. Dell Technologies rose by over 4%, AMD fell by 0.8%. Serve Robotics rose by 11%, CrowdStrike rose by nearly 3%, BullFrog AI fell by over 3%, SoundHound AI, an AI voice company held by NVIDIA, remained flat, BigBear.ai rose by 1.7%, C3.ai rose by 4.6%, Snowflake rose by 3.9%, Oracle rose by 2.4%, Palantir rose by about 2%.

• Chinese concept stocks continue to strengthen. The NASDAQ Golden Dragon China Index rose by over 3%, rising nearly 12% for the whole week and continuously rising for four weeks, returning to the highest level since February last year. The China Technology Index ETF (CQQQ) closed up by 5.7%, with a weekly increase of 20.30%, continuing the performance of a 23.25% increase last week. The China Internet Index ETF (KWEB) closed up by 3.3%, with a weekly increase of 13.2%, continuing the performance of a 26.79% increase last week. The Direxion FTSE China Bull 3X ETF (YINN) rose by nearly 11%, with a weekly increase of 35.22%, continuing the performance of a 59.50% increase last week; the Direxion FTSE China Bear 3X ETF (YANG) fell by nearly 10%. The Roundhill China ETF (DRAG) rose by about 2%, rising nearly 13% pre-market, and Friday was the second day of listing in the United States. Xtrackers Harvest CSI 50 (ASHS) closed up by 6.03%, and Deutsche X-trackers Harvest CSI 300 Index ETF (ASHR) closed up by 526%. FTSE A50 futures rose by over 0.9%, reaching a new high since January 2012.

• Among popular Chinese concept stocks, Bilibili, Nio, Li Auto, Alibaba, Baidu all rose by over 1%, XPeng rose by over 3%, Tiger Brokers rose by nearly 35%, Trip.com rose by nearly 6%, but Fangdd fell by nearly 33%. BingEx Ltd. (ADR code FLX), the U.S. IPO of FlashEx Limited, opened flat on the first day, reporting $16.50. It rose by a maximum of 33% to nearly $22, closing up by over 9%. It was temporarily halted due to excessive volatility during trading, providing services to individual and corporate customers in China.

• Other key stocks: 1) Reports suggest Tencent is considering acquiring French gaming company Ubisoft Entertainment, causing Ubisoft's European stocks to rise by over 33%. 2) "Tesla's rival" Rivian fell by nearly 9% and closed down by over 3% after lowering this year's car production guidance and delivering less than expected in the third quarter, attributed to production interruptions caused by supply shortages. 3) U.S. low-cost airline Spirit Airlines plummeted by over 37% and closed down by over 24% to a historic low. Reports suggest the company is discussing potential bankruptcy terms with bondholders, and in March, regulatory authorities suspended its merger with JetBlue Airways This year has experienced an "ankle cut". 4) CVS Health rose by 2.6%, considering the spin-off of retail pharmacies and health insurance departments, and conducting a strategic evaluation of its business, seen as a significant reversal of long-term strategy. 5) In the airline sector, low-cost carrier Frontier Group rose by 16.43%, JetBlue Airways rose by 14.24%, United Airlines and American Airlines rose by about 6.4%.

Boosted by optimistic sentiment, European stocks expanded their gains in the closing session, ending a four-day decline, but still accumulated losses for the whole week. The oil and gas sector continued to follow the rise in oil prices, automotive stocks turned higher, and the Italian stock index rose by more than 1%. Dock workers on the U.S. East Coast and Gulf Coast ended their strike, causing European shipping stocks to fall across the board as they missed the opportunity to gain market share, with Danish shipping giant Maersk falling by more than 8%. :

The STOXX 600 index in Europe closed up by 0.44% at 518.56 points, with a weekly decline of 1.80%. The Eurozone STOXX 50 index closed up by 0.68%, with a weekly decline of 2.22%. The FTSE All-World 300 index closed up by 0.33%, with a weekly decline of 1.80%.

The German DAX 30 index closed up by 0.55%, ending a four-day decline, with a weekly decline of 1.81%. The French CAC 40 index closed up by 0.85%, with a weekly decline of 3.21%. The Italian FTSE MIB index closed up by 1.28%, with a weekly decline of 3.23%. The UK FTSE 100 index closed down by 0.02%, with a weekly decline of 0.48%. Oil prices drove Norwegian stock indexes to rise by more than 3% for the week.

Market downturn reduces interest rate cut expectations for central banks in Europe, the U.S., and the U.K., U.S. Treasury bonds plummet, yields soar across the board, with short-term bond yields rising more significantly. The two-year U.S. Treasury bond yield surged by 22 basis points to 3.92%, the best half-year increase in four weeks, while the 10-year benchmark bond yield rose by nearly 14 basis points to 3.99%, hitting a two-month high, and European bond prices followed the decline in U.S. bonds:

• U.S. Bonds: At the close, the two-year U.S. Treasury bond yield rose by 22 basis points to 3.9259%, below 3.73% before the release of non-farm payrolls at 20:30 Beijing time, with a weekly increase of 36 basis points. The U.S. 10-year benchmark Treasury bond yield rose by over 13 basis points, hitting a daily high of 3.9827%, with a weekly increase of over 22 basis points.

• Eurozone: At the close, the yield on the 10-year German bond rose by 6.6 basis points to 2.210%, marking a three-day consecutive increase and a nearly 8 basis point increase for the week, showing a V-shaped reversal trend overall. The yield on the 2-year German bond rose by over 12 basis points to 2.203%, with a nearly 13 basis point increase for the week. The yield on the 10-year UK bond rose by over 11 basis points, with a total increase of over 15 basis points for the week, while the yield on the 2-year UK bond rose by 17 basis points, marking the largest increase in four and a half months with an approximately 20 basis point increase for the week.

Safe-haven demand and positive economic data drove the US Dollar Index to rise for the fifth consecutive day this week, breaking above 102 and reaching a seven-week high, halting a four-week decline. The single-week performance is the best since September 2022, with the Euro and Pound declining for six consecutive days, and the Yen falling by over 1%, briefly breaking below 149 to a seven-week low, with a 4.7% decline for the week. Offshore Renminbi fell for six consecutive days, dropping by 500 points at one point and falling below 7.10 yuan, erasing gains since September 18th. Bitcoin rose above $62,000 again:

• US Dollar: The US Dollar Index (DXY) rose by 0.7% to 102.69, reaching a seven-week high since August 16th, standing above the 50-day moving average for the second consecutive trading day, with a total weekly increase of 2.2%.

• Non-US currencies generally fell: The Euro against the US Dollar fell by 0.37%, dropping below 1.10 to a seven-week low since August 15th, with a total weekly decline of 1.8%. The Pound against the US Dollar fell by 0.4%, briefly falling below 1.31 to a three-week low since September 12th, with a 2% decline for the week.

• Japanese Yen: The Japanese Yen against the US Dollar fell by 1.4%, briefly falling below 149 to a seven-week low since August 16th, falling for three consecutive days with a 4.7% decline for the week.

• Offshore Renminbi (CNH): The Offshore Renminbi against the US Dollar fell by 500 points or 0.7%, briefly falling below 7.10 yuan, falling for six consecutive days and erasing gains since September 18th, with a total weekly decline of over 1100 points or 1.7%.

• Cryptocurrencies: The largest cryptocurrency, Bitcoin, rose by over 2% to surpass $62,000 again, with a total weekly decline of over 5%. The second-largest cryptocurrency, Ethereum, rose by nearly 4%, breaking above $2400 to move away from a two-week low. At the New York closing, the CME Bitcoin futures main contract was at $62,720.00, up 2.80% from Thursday's New York closing, with a weekly cumulative decline of 5.17%. The CME Ethereum futures main contract was at $2440.00, up 3.41% from Thursday, with a weekly decline of 10.43%.

The market continues to worry about the escalation of conflicts in the Middle East leading to supply disruptions, especially concerned about Israel's strikes on Iran's oil infrastructure. Oil prices rose for four consecutive days, with a temporary increase of over 2% on Friday to a five-week high. Brent crude briefly rose above $79, narrowing gains at the close, with a total weekly increase of over 9%. US crude oil had its best single-week performance since October 2022, and European natural gas also rose to a five-week high:

• Crude Oil: WTI November crude oil futures closed up $0.67, up nearly 0.91%, at $74.38 per barrel, with a weekly gain of 9.09%. On Friday, it rose to a high of $1.84 or 2.5%, briefly breaking through $75, the highest in five weeks since August 30.
• Brent Oil: Brent December futures closed up $0.43, up 0.55%, at $78.05 per barrel, with a weekly gain of 9.10%. On Friday, it rose to a high of $1.67 or 2.2%, crossing $79 for the first time since August 30. Speculators' bullish sentiment towards Brent oil also reached a five-week high.

• Natural Gas: NYMEX November U.S. natural gas futures fell over 3.90%, at $2.8540 per million British thermal units, with a weekly decline of over 1.65%. The European benchmark TTF Dutch natural gas futures rose over 3% to a five-week high, with a weekly gain of over 7.3%. EU carbon taxes fell over 6% this week.

The robust employment situation leaves no room for a significant rate cut by the Fed in November, with the U.S. dollar and bond yields rebounding together, putting pressure on gold for two consecutive days. Gold saw its first weekly decline in four weeks, but silver rose for the fourth consecutive day to return to a twelve-year high, while London nickel rose by about 2.3% on Friday, with a weekly gain of over 5.8%:

• Gold: COMEX December gold futures fell 0.50% to $2665.79 per ounce at the close. Spot gold fell the most by $24 or 0.9% after the pre-market non-farm data was released, approaching $2630, then narrowed to a 0.2% drop back above $2650, and at the close, the decline slightly widened to 0.5% hovering around $2640, with a weekly decline of 0.5% ending a three-week rally.

• Silver: COMEX December silver futures fell 0.15% at the close, at $32.415 per ounce. Spot silver also fell 1.6% below $32 after the non-farm data, but then rose by 2.9% to nearly $33, rising for four consecutive days to the highest level since 2012, with a significant narrowing of the gain to 0.3% at $32.15 at the close, with a weekly gain of 1.7%.
• London Industrial Metals Rise Across the Board: LME copper futures closed up $78 or 0.8% at $9944 per ton, with a weekly decline of 0.4%. LME aluminum futures closed up $24 at $2653 per ton. LME zinc futures closed up $42, up over 1.3%, at $3166 per ton, with a weekly gain of nearly 2.46%. LME lead futures closed up $7 at $2150 per ton. LME nickel futures closed up $403, up 2.29%, at $17992 per ton, with a weekly gain of 5.86% LME Tin futures rose by $96 to $33,805 per ton, with a weekly increase of 2.71%. LME Cobalt futures remained flat at $24,300 per ton.

Updates before 22:00 on October 4

On Friday, October 4, U.S. stocks opened higher, with the Dow rising over 230 points at the opening, and the Nasdaq up over 1%. Small-cap indices rose by 1.5%.

The pre-market release of the U.S. September non-farm payrolls showed a significant increase of 254,000 jobs, with a revision of the previous value and a further decrease in the unemployment rate. This confirmed the market's expectation of a soft landing for the U.S. economy, leading traders to retract their bets on a significant rate cut in November.

At the market open, Chinese tech and technology stocks rose across the board. Ctrip rose by about 7%, JD.com by about 3%, AMD and Tesla by nearly 4%, Amazon by nearly 3%, and Nvidia by over 2%. The NASDAQ Golden Dragon China Index rose by 2.4%, significantly outperforming the broader U.S. market.

However, "Tesla's rival" Rivian fell by about 5% after the company lowered its 2024 car production expectations. U.S. low-cost airline Spirit Airlines plummeted by 35% amid reports that the company is discussing potential bankruptcy terms with bondholders.

U.S. bond prices fell sharply, with yields rising across the board, especially in short-term yields. The two-year U.S. bond yield rose by over 14 basis points to nearly 3.86%, the 10-year benchmark bond yield rose by 10 basis points to 3.95%, and the five-year yield rose by 15 basis points to 3.78%.

Oil prices continued to rise, with U.S. oil surpassing $74 per barrel and Brent crude breaking above $78 per barrel, posting a weekly gain of about 9%. Goldman Sachs stated that if a potential Israeli attack leads to a reduction of 1 million barrels per day in Iran's oil production for a period of time, oil prices could surge by $10 to $20 per barrel.

The U.S. dollar index surged over 60 points and broke above 102 after the non-farm data release, while spot gold briefly approached $2,640. U.S. stocks narrowed their early losses and traded around $2,650.

Wall Street News' Pre-Market Article on U.S. Stocks

On Friday, October 4, the U.S. Bureau of Labor Statistics announced that non-farm payrolls increased by 254,000 in September, far exceeding the expected 150,000. The unemployment rate for September was 4.1%, lower than the expected and previous value of 4.2%.

Recently, Goldman Sachs trader Flood warned, "The stock market hopes that the non-farm data roughly meets expectations. Being too hot or too cold will accelerate risk aversion behavior over the weekend (obviously, being too cold is much worse)."

• After the data release, the U.S. dollar index surged over 60 points, now at 102.49.

  

• U.S. stock futures rise in the short term, with Nasdaq 100 index futures up 0.6%.
• U.S. Treasury bonds fall, pushing yields up by 7 to 16 basis points. The two-year Treasury yield surged by 16 basis points to 3.87%, while the 10-year Treasury yield rose by 9 basis points to 3.94%.
• Spot gold declines in the short term, currently at $2,641.21 per ounce.
• On the news front, traders adjusted their bets on a 50 basis point rate cut in November after the data release, with expectations for the Fed's future rate cuts at less than 100 basis points.

【Update at 20:54】

The Chinese Yuan depreciates. Offshore Renminbi against the U.S. dollar fell by nearly 400 points intraday, now at 7.0892.

【Update at 20:42】

U.S. stock futures extend gains, with Nasdaq 100 index futures up 1%.