To The Moon

Last Week's Recap

U.S. Market - All indexes rallied

• Indexes: Major U.S. indexes ended the week in positive territory despite sharp intraday swings. The S&P 500 rose 1.7%, rebounding as investors digested a softer U.S. tone on China trade talks and moved past Thursday’s regional bank scare. The Russell 2000 hit record highs midweek but sharply reversed as credit concerns in regional banks triggered a sell-off.

• VIX: The VIX spiked above 28 at Friday’s open before retreating back near 20, underscoring the market’s tug-of-war between policy headlines, tariff risks, and strong corporate earnings.

• Crypto: Bitcoin briefly tumbled to 103,530 on Friday, highlighting stress among speculative assets and amplifying broader market risk sentiment.

• Tariff Tone eases: Trump struck a more conciliatory tone, suggesting a potential meeting with Chinese President Xi Jinping later this month, easing fears of further escalation.

• Credit Scare: Late-week pressure emerged after Zions and Western Alliance disclosed deteriorating loan quality, sparking a sharp sell-off in regional lenders. However, the group rebounded Friday as investors deemed the issues isolated rather than systemic.

U.S. Sectors & Stocks — Bank Giants Shine, Regionals Rattle

• Sectors: All S&P 500 sectors finished higher despite midweek volatility. Communication Services led (+3.3%) on GOOGL strength. Defensive names like KO and PG saw flows during risk-off swings.

• Tech: Technology rallied as AI/semi winners drove early strength, but tech was also the first to give back gains during tariff scares. Key movers included MU, AMAT, KLAC and storage plays.

• Financial: Big banks delivered strong earnings and investment banking revenues, keeping XLF flat on the week. In contrast, regional banks sold off after loan quality concerns (ZIONS, WAL), dragging KRE down ~2%. Insurance stocks also lagged.

• TSMC (TSM): Beat third-quarter estimates with a 49% EPS gain while sales swelled 37%, boosted by AI data center chips. Also guided higher for Q4 revenue. Shares hit new highs before reversing.

• ASML (ASML): Beat Q3 EPS, missed slightly on sales, but rallied nearly 10% on upbeat 2026 outlook.

• Broadcom (AVGO): Unveiled Thor Ultra 800G AI Ethernet NIC for mega data centers; Thor Ultra supports data speeds of 800 gigabits per second and is designed for large-scale AI data centers with over 100,000 AI processors. Stock rebounded 7.6%.

• Bank Giants: JPM, GS, WFC, C, MS, BAC beat earnings expectations, fueled by dealmaking and consumer banking. MS, WFC and BAC hit new record highs mid-week.

• Regional Banks: Zions Bancorp (ZIONS) and Western Alliance (WAL) spooked markets with bad loans. Investors have been on edge about lenders broadly, following recent bankruptcies by auto parts maker First Brands and auto lender Tricolor. But relief came Friday as Ally Financial (ALLY) and super-regionals topped estimates, easing systemic fears.

• Online Brokers: Charles Schwab (SCHW) and Interactive Brokers (IBKR) both beat third-quarter estimates on strong trading activity and asset growth. SCHW added $137.5 billion in core net new assets, with total client assets at $11.59 trillion. IBKR reported a 23% increase in commission revenue.

• Transports: Trucker J.B. Hunt Transport Services (JBHT) soared 20% on cost-cutting and productivity gains. Railroad stock CSX (CSX) rose around 3% despite slight revenue dip, citing coal headwinds offset by pricing and intermodal growth.

• Johnson & Johnson (JNJ): Beat expectations with EPS growth up 16% and sales growing 7% to nearly $24 billion. JNJ announced plans to spin off its orthopedics business into a new company called DePuy Synthes. JNJ freshed a new high.

• American Express (AXP): Crashed its earnings estimates and rose over 7% Friday. Amex also raised the lower end of its full-year guidance range on profit and revenue.

Hong Kong Market - HSI fell 4%

• HSI: The Hang Seng Index fell 3.97%, its sharpest weekly decline since April’s tariff-driven selloff. Risk sentiment deteriorated amid renewed U.S.-China tariff, mixed earnings, and low mainland liquidity. The Hang Seng Tech Index (HSTECH) plunged 7.99%, underlining pressure on heavyweight tech names.

• Policy: Investors are now bracing for the 4th Plenary Session of the Communist Party, beginning Monday. The four-day meeting will outline China’s economic and social roadmap through 2030 — a key catalyst for Hong Kong markets.

• According to Nomura, China may continue to push for tech self-sufficiency, especially in semiconductors & AI, and ramp up efforts to clean up debts in the property market, end deflation and fix the fiscal system. China may set a growth target of around 4.5% for 2026 and roll back that to around 4% towards 2030.

Singapore Market - STI Lost 2.2%, Amid Global Headwinds

• STI: The Straits Times Index fell 2.2%, mirroring regional weakness as global volatility and mixed earnings dampened sentiment.

• NIO (NIO.SI): Slumped 12.8% after Singapore sovereign wealth fund GIC filed a lawsuit alleging inflated revenues and securities violations tied to past ADS purchases. The case reignited concerns around NIO’s financial integrity.

• Singapore Airlines (C6L.SI): Scoot launched a major fare sale with 380,000 discounted tickets. Shares drifted 1.5% lower, with investors cautious despite travel demand catalysts.

Australian Market - ASX 200 +0.4%, But Miners Under Pressure

• XJO: ASX 200 rose 0.41%, outperforming regional peers, though sentiment remained fragile amid global trade and geopolitical risks.

• Commodities:Concerns around U.S.-China tariff escalation and tight credit markets weighed on resource names. Upcoming talks between PM Anthony Albanese and President Trump injected uncertainty, especially around critical minerals.

• Critical Minerals: Despite Australia’s push to position itself as a strategic supplier of lithium, copper, and rare earths, miners faced selling pressure on fears of new tariff or export disruptions.

The Week Ahead

Macro Factors - CPI, APEC & Earnings continue

• CPI: BLS is set to release September's CPI on Friday, after a delay of more than a week. Expectations (FactSet): Headline - YoY: 3.1% (up from 2.9%), MoM: 0.39% (slightly below 0.40%); Core CPI - 0.30% MoM, 3.1% YoY (unchanged)

• Regardless of the data, markets widely expect a 25 bps rate cut at the Fed’s Oct. 28–29 meeting.

• Government Shutdown: The U.S. government shutdown has stretched into its third week. Economists caution that prolonged disruption could weigh on near-term GDP, though most expect any impact to be temporary. The Fed also enter its blackout period ahead of the committee's October meeting, which is set to take place Oct. 28-29.

• Tariffs: U.S.–China trade tensions loom ahead of planned talks at the APEC Economic Leaders’ Meeting in South Korea (Oct. 31–Nov. 1), keeping tariff uncertainty in focus.

Earnings

• Strong Start: Earnings season opened positively, with financials beating expectations on the back of easing rate outlooks and stronger M&A activity. S&P 500 earnings are forecast to grow 8.4% YoY, but historical beats could push actual growth above 13% for the fourth consecutive quarter, according to FactSet.

• Key Reports: This week, some of the week's biggest names include Tesla (TSLA), chipmaker Intel (INTC), streaming giant Netflix (NFLX), and Coca-Cola (KO).

• Investor Focus: With a data blackout during the shutdown and emerging signs of labor market softness—potentially AI-related—investors will scrutinize management commentary more than usual for macro guidance.