Pre-market market developments. 1. On Wednesday, October 7, ahead of the US market open, all three major US stock index futures fell. As of press time, Dow futures were down 0.69%, S&P 500 index futures were down 0.35%, and Nasdaq futures were down 0.66%.

2. As of press time, Germany's DAX index was down 1.28%, the UK's FTSE 100 was down 0.75%, France's CAC 40 was down 1.18%, and the Euro Stoxx 50 was down 1.79%.

3. As of press time, WTI crude oil was up 0.41% at $89.81 per barrel. Brent crude was up 0.66% at $101.24 per barrel.

Market News

Houthi attacks and a US Gulf of Mexico storm heightened supply risks, pushing oil prices higher. Influenced by a mix of competing factors, oil prices rose on Wednesday. Traders had to weigh a new round of Houthi attacks on Saudi Arabia and storm-related oil and gas shutdowns in the US Gulf of Mexico against signs that Middle East crude supply was recovering. Saudi Arabia's General Authority of Civil Aviation said on Tuesday that Jizan's King Abdullah International Airport and Najran International Airport were attacked and damaged, with three people injured. Beyond the Middle East, a forming storm also caused some crude production in the US Gulf of Mexico to shut in. The US Bureau of Ocean Energy Management said that, as of Tuesday morning, due to companies taking precautions against the storm, 185,120 barrels per day of offshore crude production had been shut in, accounting for 9.2% of total Gulf of Mexico output; at that time, no personnel evacuations had been carried out on any production platforms or drilling rigs.

Federal Reserve rate hike prospects remain uncertain: Daly focuses on the persistence of inflation shocks, while Bowman advances bank regulatory reform. The Federal Reserve is simultaneously pushing forward important adjustments in both monetary policy and bank supervision. San Francisco Fed President Daly said she supported the Fed's September rate hike to address rising inflation risks, but whether further hikes are needed in the future will depend largely on whether the inflation shocks from tariffs, energy prices and AI investment are only temporary or will persist and even compound one another. Meanwhile, Fed Vice Chair for Supervision Bowman announced that she will restructure the US bank regulatory system and consider adjusting the asset-size thresholds that trigger stricter capital, liquidity and stress-test requirements.

The 10-year Treasury auction and FOMC meeting minutes are due soon, and Treasury yields moved higher. Investors will face two key events on Wednesday. The FOMC meeting minutes will be released at 2 p.m. Eastern Time, and the market will scrutinize them for clues on the Fed's monetary policy decisions. At the Fed's September meeting, policymakers voted to raise rates, the first hike since 2023. Over the past six weeks, concerns about inflation and rising energy prices have triggered a bond selloff, pushing Treasury yields steadily higher. According to CME's FedWatch tool, traders currently price a 78% probability that the Fed will keep rates unchanged at its next meeting. The US Treasury plans to auction $39 billion of 10-year notes on Wednesday. Amid multiple concerns about inflation, debt levels and duration risk, the auction will test whether current yield levels are enough to attract buyers, or whether investors will demand a higher risk premium.

The 30-year US Treasury yield climbed to its highest level since 2002. As oil prices continued to rise, US Treasuries extended their decline on Wednesday, with yields returning to the highs touched earlier in the week. The 30-year Treasury yield rose 5 basis points to 5.7%, while the 10-year yield rose 4 basis points to 5.3%. Traders further increased short bets against US Treasuries, suggesting the selloff that has driven long-term Treasury yields to nearly 24-year highs may still have room to run.

Shell CEO Sawan: Middle East oil flows recover to about 80% of pre-war levels. Shell (SHEL.US) CEO Sawan said on Tuesday that Middle East oil flows have recovered to about 80% of pre-war levels, confirming the region's resilience in maintaining supply commitments to global markets. Although several banks and shipping analysis agencies also believe Middle East oil flows are approaching pre-conflict levels, Sawan's latest remarks provide one of the most authoritative assessments to date for gauging the pace of the region's export recovery. Data from ship-tracking agency Kpler show that Saudi Arabia, the UAE, Iraq, Oman, Qatar, Kuwait and Iran exported a combined daily average of nearly 16.33 million barrels of oil in September, about 3.2 million barrels less than the roughly 19.51 million barrels before the conflict broke out in February this year, recovering to about 80% of pre-war levels. Crude oil shipped by Middle East producers through the Strait of Hormuz is estimated at nearly 9.72 million barrels per day, and this figure does not include vessels that turned off automatic identification systems to evade detection.

JPMorgan: US deep distressed loans rise to a post-pandemic high, with tech the hardest-hit sector. JPMorgan strategists wrote on Tuesday that the tail of deep distress in the leveraged loan market has risen to its highest level since the early days of the pandemic, with technology the single most stressed sector. Specifically, the volume of loans trading below 60% of face value, the deep-distress level, rose to $65 billion from $40 billion a year earlier, the highest since March 2020. Distressed leveraged loans, or those trading at 80% of face value or below, are also increasing, totaling $139.8 billion, surging nearly 90% over the past 12 months and only $4 billion below the May 2020 peak.

Stock News

Shell (SHEL.US) expects strong third-quarter oil trading results: refining margins surge to a record $42 per barrel. Shell expects its oil trading business to deliver strong third-quarter results, as tightening global fuel supply drives refining margins to an all-time high. The energy giant said oil trading was in line with the strong performance of the previous three months, helped by a refining margin of $42 per barrel, far exceeding the pre-2022 quarterly high. As the Iran war and attacks on Russian refineries tightened global markets, Shell and its peers have been raising refinery utilization as much as possible, shutting down for maintenance only when absolutely necessary. Shell's refinery throughput was only slightly below the previous quarter, when they were running at full capacity. Shell's refinery utilization this quarter was only slightly below the prior quarter, when refineries were operating at full capacity.

Uber (UBER.US) plans to acquire ezCater for $2.3 billion in cash to expand corporate catering services. Uber will acquire catering services company ezCater Inc. for $2.3 billion in cash, a move that will help the Uber Eats delivery platform reach more corporate customers. ezCater provides a catering services platform through which companies can arrange catering for events, meetings and other gatherings. Uber said in a statement on Tuesday that the private company has generated more than $2.5 billion in gross bookings over the past 12 months and works with more than 140,000 restaurants across the United States. ezCater customers spend an average of more than $400 per order. The acquisition will help Uber better compete with DoorDash (DASH.US), the leading US food delivery platform. DoorDash launched a catering service product for corporate employees in April this year.

Apple (AAPL.US) reportedly teams up with LG to enter smart home: doorbells, thermostats, cameras and other accessories to carry the LG brand. According to people familiar with the matter, Apple (AAPL.US) is about to step up its smart home device push, including doorbells, thermostats and other accessories, and these products will be developed by Apple and LG Electronics through an unusual partnership. The related products will be part of a device ecosystem that can work with Apple's new smart home hub, while also supporting an upgraded HomePod mini and a new TV set-top box. Apple's own new devices are scheduled to be released on October 13. The people said the products Apple is developing with South Korea's LG also include smart anti-theft locks, indoor security cameras, outdoor security cameras and floodlight cameras. Although both sides participate in development, the products will use the LG brand, with LG handling manufacturing and product support.

Hollywood giant Skydance (SKYD.US) is officially born. On Tuesday local time, Paramount Skydance completed its massive $110 billion acquisition of Warner Bros. Discovery (WBD), and the combined new company was officially named "Skydance," meaning a brand-new Hollywood giant has been born. The deal brings together film studios such as Mission: Impossible, Harry Potter and DC Studios, as well as major television and streaming networks including CBS, CNN, Paramount+ and HBO Max, creating a comprehensive entertainment company spanning film, television and news. Shares of the combined company moved from Nasdaq to the New York Stock Exchange on Tuesday under the ticker "SKYD."

Microsoft (MSFT.US) is expected to unveil new Surface devices, with no cloud computing power needed, aimed at AI developers. Microsoft will hold a special event in San Francisco on October 7 and has stayed silent on the agenda. Microsoft confirmed the agenda includes Windows, RTX Spark and Surface-related content, but has not yet disclosed specific details. This is Microsoft's first event dedicated to Windows and Surface since the 2024 Copilot+ PC launch event. Unsurprisingly, a major focus of the October 7 event will be Microsoft's new hardware devices equipped with RTX Spark. The Surface Laptop Ultra already made its debut in June this year, and more hardware details, performance capabilities and availability information for this device are expected to be announced on site in San Francisco.