Fed's Mester Supports Rate Cuts; Gold Hits Record High, Tesla Drops Over 4%

Federal Reserve Survey: Rising Inflation Expectations in the U.S.

September Inflation Expectations Increase

In September, consumer expectations for inflation over the next year rose to 3.4%, up from 3.2% the previous month. Expectations for annualized inflation over the next five years also slightly increased from 2.9% to 3%, while the three-year inflation expectation remained stable at 3%. Concerns about unemployment in the next 12 months have also risen, with overall unemployment rate expectations increasing.

Fed Governor's Remarks on Interest Rates

Fed Governor Milan, appointed by Trump, stated that inflation risks are manageable and supports further interest rate cuts, estimating the neutral rate to be around 0.5%. He believes there is no significant conflict between achieving "maximum employment" and "price stability."

Trade Tensions with Canada

Tariffs on Canada

On October 7, President Trump announced that the U.S. would impose tariffs on Canada, suggesting that Canada would be willing to accept this. He described the competition between the two countries as a "natural conflict" and mentioned that the U.S. is exploring ways to reduce certain tariffs.

Gold Price Forecasts

Goldman Sachs Raises Gold Price Target

Goldman Sachs has raised its gold price target for the end of 2026 to $4,900 per ounce, up from $4,300, reflecting a nearly 14% increase. This adjustment is based on a 17% rise in gold prices since August 26, driven by persistent inflows from Western ETFs and central bank purchases.

U.S. Government Shutdown Update

Key Dates for Resolution

The U.S. government shutdown has entered its second week, with political pressure increasing as key payroll dates approach on October 10 and 15. Goldman Sachs predicts that while the shutdown may last for weeks, it is unlikely to extend beyond the military payroll date on October 15.

Stock Market Overview

U.S. Indices Decline

On Wednesday, all three major U.S. indices fell, with the S&P 500 ending its seven-day winning streak. Notable declines included Tesla down 4.45% and Google down 1.86%. The Nasdaq China Golden Dragon Index fell 2.24%, with Baidu and Alibaba both experiencing significant losses.

Tesla's New Model Release

Model 3/Y Price Cuts

Tesla has released a "standard version" of the Model 3 and Model Y, priced at $39,990 and $36,990 respectively. Analysts expressed disappointment over the modest price reduction of about $5,000.

AI and Semiconductor Developments

xAI's Funding and Nvidia's Role

Elon Musk's AI startup xAI is reportedly raising $20 billion, including equity investments from Nvidia, to support its data center operations.

Trilogy Metals Surges

Trilogy Metals saw its stock price soar over 210% after the U.S. government announced a $36.5 million investment in the company as part of a strategy to secure critical mineral supplies.

Oracle's Financial Performance

Concerns Over Profit Margins

Oracle's cloud business has faced scrutiny due to low profit margins, with reports indicating a gross margin of only 14% for its server leasing business.

Dell's Growth Expectations

AI Server Demand Boosts Projections

Dell Technologies raised its growth forecast, expecting annual sales to grow by 7% to 9% over the next four years, driven by strong demand for AI servers.

New Listings and Collaborations

Longwind Pharmaceutical's Successful IPO

Longwind Pharmaceutical debuted at HK$14.75 per share, receiving nearly 6,700 times subscription, with significant gains in the gray market.

Partnership Between Botai and SenseTime

Botai has signed a framework agreement with SenseTime to promote AI applications in smart connected vehicles.

Market Outlook

Hong Kong Stock Market Trends

According to CMB International, the Hong Kong stock market is expected to continue its "slow bull" trend, supported by positive developments in U.S.-China trade negotiations.

Upcoming Economic Data

EIA Oil Data Release

Investors should pay attention to the upcoming EIA oil data on Wednesday, as well as the Federal Reserve's monetary policy meeting minutes to be released early the next day.