Pre-market market trends
1. On October 21 (Wednesday), the futures of the three major US stock indexes rose sharply before the US stock market. As of press release, Dow futures were up 0.16%, S&P 500 futures were up 0.28%, and NASDAQ futures were up 0.69%.
2. As of press release, the German DAX index had risen 0.87%, the UK FTSE 100 had risen 0.06%, France's CAC40 had risen 0.72%, and the European Stoxx 50 had risen 0.98%.
3. As of press release, WTI crude oil rose 0.68% to $98.49 per barrel. Brent crude rose 0.37% to $109.19 per barrel.
Market news
Iranian Foreign Minister: There is currently no reason to see progress in the negotiations. Iranian Foreign Minister Alagzi wrote that his meeting with several foreign ministers during the UN General Assembly last month conveyed a consistent message: Iran is seeking a just and decent agreement with the US. To achieve this goal, the White House must show sincerity and a genuine will to put an end to aggression once and for all. He said that Iran is firmly committed to seeking a peaceful resolution to the conflict in a dignified manner, but it is also fully prepared for self-defense. Alagzi pointed out that Trump launched this war based on fundamentally wrong assumptions about Iran's strength. At the same time, Iran has no confidence in the US government's claims of sincerity to live peacefully with Iran. There is little reason to expect progress now, given that the White House has shown no will to reach a consensus and has instead threatened to resort to more violence.
Netanyahu is pushing for a restart of military action against Iran, and US officials say it is “not urgent.” According to reports, Israeli Prime Minister Binyamin Netanyahu is pushing for the resumption of large-scale military attacks on Iran. Earlier this month, he had instructed the military to develop a combat plan for a new round of large-scale offensives. Three people familiar with the matter revealed that the Israeli military had previously drawn up a multi-day bombing action plan, which was scheduled to begin on the weekend of October 10. The targets include civil infrastructure such as power plants, nuclear facilities, and targets related to the Iranian regime. However, in the end, this action was not implemented. People familiar with the matter said that Trump's opposition to restarting the conflict before the US midterm elections on November 3 was the reason for the cancellation of the action.
The yield on French 10-year treasury bonds hit a 24-year high of 5%. On Wednesday, the yield on French 10-year treasury bonds reached 5%, a 24-year high, showing growing concerns among investors about France's ability to recover from a weak fiscal situation. Since this year, due to soaring energy prices, central banks have raised interest rates one after another to respond, and global treasury bond yields have generally risen. Governments in developed markets are also facing a sharp increase in the size of debt, and France's borrowing costs have risen more than most of its peers. Meanwhile, the premium required for investors to hold French treasury bonds over the benchmark 10-year German treasury bonds is about 157 basis points, close to the highest level since 2011. French bonds are under great pressure due to the weakening of the government, which is trying to pass the budget and cut the high deficit in parliament. Next year's fiercely contested elections and large-scale protests across France are also dragging down its market performance.
BlackRock CEO Fink: Slow data center construction will increase inflation. BlackRock CEO Fink warned that as demand for artificial intelligence (AI) accelerates, delays in data center construction may drive up computing costs and pose a threat to economic growth. Fink said, “If we don't build these data centers, we will further increase inflation because current computational costs are already very high. The faster we build our data center, the more computing power it can provide, and so we can reduce computing costs faster.” Fink points out that slowing the pace of development of this technology will have broader consequences. “If we delay the construction process of this technology, I think it will really endanger the economy.” Fink was once unconvinced by concerns about the “artificial intelligence bubble”. He pointed out that the core of the problem was a shortage of supply, and said that demand growth exceeded expectations. He also warned that if construction of the relevant infrastructure lags behind, it may eventually limit people's use of this technology.
The next wave of AI debt is approaching: tech giant CDS has soared to a record high, and the bond market is in full swing. Credit risk indicators for some big tech companies rose to record highs on Tuesday. Investors are preparing for a wave of bond issuance after the earnings season, and are worried that this wave of supply may further impact the already pressured debt market. According to ICE Data Services data, Oracle (ORCL.US) credit default swap (CDS), which is widely regarded as an AI debt risk barometer, once rose to a record 343 basis points. Meta's credit risk index also hit an all-time high, rising 6.3 basis points to 114.8 basis points before it released its earnings report on Wednesday. According to the data, global companies have borrowed more than 450 billion US dollars this year for artificial intelligence-related research and development. Now, as technology companies announce their latest results and end the so-called quiet period, the market expects them to once again enter the bond market and issue on a huge scale.
Trump again pushes a new AI power policy: requiring large data centers to build their own power supplies, promising a “drastic drop” in electricity prices. US President Trump called on large US data centers to generate their own electricity, once again pushing technology companies to pay for the power generation capacity needed to support the expansion of AI infrastructure. Trump wrote, “As President of the United States, I have been closely monitoring data centers and have come to a very firm conclusion. I'm asking new, large, and some even giant data centers to generate their own electricity and give back or sell the excess power to the local community or grid.” He added that this approach is expected to lead to a “drastic drop” in electricity prices. Trump also urged tech companies to provide financial incentives to communities hosting data centers, saying residents could get dividends from these projects.
Survey: The Bank of Japan is expected to raise interest rates to 1.50% in December, maintaining the pace of quarterly rate hikes. According to a Reuters survey, most economists expect the Bank of Japan to raise interest rates to 1.50% in December, continuing the faster pace of quarterly rate hikes in the current austerity cycle after the June and September rate hikes — at the beginning of this cycle, the Bank of Japan only raised interest rates once a year. The weak yen and the war in the Middle East are driving up energy and import costs, increasing inflationary pressure on Japan. It is expected that interest rates will be raised at least twice, and the number of respondents will increase to 2.0% by the middle of next year. The yen has been under heavy sell-off pressure for most of this year, triggering intervention by the Japanese authorities and the US Treasury. Recently, the yen has stabilized relatively, which also provided support for the December interest rate hike.
Individual stock news
SpaceX (SPCX.US)'s Q3 revenue surged 161% year over year and turned a loss into profit, and the revenue of Super Smart's business soared 830%. On Tuesday, SpaceX announced financial results for the third quarter of 2026. Driven by the rapid expansion of the super-smart business and the continued growth of Starlink's business, the company's revenue for the quarter surged 161% year over year, turning a loss into a profit. Among them, super-smart business revenue soared 830% year over year, becoming the company's largest source of revenue for the first time. According to financial reports, SpaceX's third-quarter revenue reached 14.575 billion US dollars, up 161% from 5.576 billion US dollars in the same period last year, and up about 87% from 7.814 billion US dollars in the second quarter. Net profit reached US$4.404 billion, a significant improvement over the net loss of US$1,054 billion in the same period last year, turning a loss into a profit. However, SpaceX's capital expenditure in the third quarter reached 19.593 billion US dollars, an increase of about 185% over the same period last year of 6.880 billion US dollars, mainly reflecting the company's continued increase in investment in superintelligent computing infrastructure.
Demand for AI servers is strong, and the quarterly revenue guidance for ultra-micro computers (SMCI.US) far exceeded expectations. The preliminary quarterly results of ultra-microcomputers announced in advance on Tuesday greatly exceeded Wall Street expectations, indicating that the boom in AI infrastructure investment is still driving rapid growth in server demand. Ultramicrocomputer said in a statement that the quarterly revenue forecast for the end of September 30 is between 18.5 billion and 19.5 billion US dollars, which is significantly higher than the average analyst forecast of 15 billion US dollars compiled by the media. Based on the median value of US$19 billion in the guidance range, the estimated revenue is about 26.7% higher than market expectations. Meanwhile, the company expects gross margin of between 12% and 12.5% for the quarter. Although Ultramicrocomputer has yet to release full quarterly financial data, initial revenue performance already reflects strong demand in the AI server market.
Nvidia (NVDA.US) Berlin GTC unleashes a new signal for AI investment. The DSX POD reduced the field deployment cycle from six months to as fast as 14 days, and simultaneously expanded production of substrates, advanced packaging, testing and optical interconnect supply chains. Huang Renxun urged Europe to speed up the application of AI. Nvidia further lays out enterprise intelligence, industrial manufacturing, telecommunications networks, robots, and autonomous driving in an effort to turn computing power demand into actual revenue. However, whether the return on AI investment can be realized is still the key for the market to continue to reevaluate.
Netflix (NFLX.US)'s Q3 revenue increased 12% year over year, and advertising revenue expectations for the full year were lowered. Streaming giant Netflix announced financial results for the third quarter of 2026 after US stocks closed on Tuesday. Driven by the increase in subscribers, the increase in membership prices and the increase in advertising revenue, the company's revenue for the quarter increased by nearly 12% year on year, net profit surged 44% year on year, and the operating profit margin further expanded. However, due to the slower than expected launch of some advertising product features, Netflix lowered its annual advertising revenue forecast and slightly lowered its annual revenue forecast.
United Continental Airlines (UAL.US)'s third-quarter revenue reached a record high, up more than 17% year over year to nearly US$17.9 billion. Continental Airlines announced financial results for the third quarter of 2026 after the US stock market closed on Tuesday. Benefiting from strong passenger demand, rising ticket prices and growth in the high-end cabin business, the company's revenue for the quarter increased 17.4% year-on-year to a record high. Despite the sharp rise in fuel costs dragging down profitability, United Continental Airlines still expects revenue growth to accelerate further in the fourth quarter. The year-on-year increase is expected to exceed 20%, setting another historical record.
User growth was compounded by price increases, and AT&T (T.US) Internet user net growth set a record, and EPS guidelines were raised. AT&T announced financial results for the third quarter of 2026 before the US stock market on Wednesday. Financial reports showed that its revenue was US$32.3 billion, up 5.3% year on year, higher than the market's agreed expectations; adjusted earnings per share were $0.65, higher than the forecast of $0.60. The company also raised the adjusted EPS guidance for the full year 2026 from $2.25-2.35 to about $2.40. User growth and price increases are the two major drivers of this year's results. AT&T pointed out that the increase in wireless service revenue comes from user growth and price increase measures in low-penetration market segments and integrated accounts, but promotional discounts for new users partially offset the effect of price increases.
Musk accelerates “superintelligence” ambitions: SpaceX and Tesla (TSLA.US) discuss a $3.5 trillion merger, and ASML.US (ASML.US) expedite delivery for Terafab. After the US stock market on Tuesday, Musk revealed two pieces of information during SpaceX's third-quarter earnings call: First, Asmack and other key equipment suppliers are already speeding up equipment delivery for Tesla and SpaceX's TeraFAB projects. Another is that SpaceX and Tesla have each set up a special committee composed of independent directors to explore the possibility of a merger — this is the most complete public statement on this potential deal so far.
Affected by the turmoil in the data center industry, Singapore DayOne is reconsidering its US IPO plan. According to people familiar with the matter, as volatility in the data center industry intensifies, Singapore-based DayOne Data Centers Ltd. is evaluating plans related to its US initial public offering (IPO), including the possibility of delaying listing or reducing the scale of fundraising. People familiar with the matter said that the company has been waiting for the right time to launch an IPO, and is also considering the possibility of delaying the listing plan and waiting for the market to pick up before proceeding. Other options include going public on a smaller scale, which could raise between $2.5 billion and $3 billion — about half of their initial target amount. According to information, investors including Coatue and DayOne, which includes GaoLin Capital, are still in touch with potential investors and hope to advance the listing process as soon as market conditions permit. Earlier, people familiar with the matter said that the company initially planned to raise up to 5 billion US dollars through listing as early as the fourth quarter, and had sought a valuation of about 20 billion US dollars.
The Micron (MU.US) Taiwan labor confrontation is now turning point: the Taichung trade union signed an agreement to withdraw from the mediation, and the supply of AI memory is temporarily relieved. Micron Memory Taiwan (Micron Memory Taiwan), a subsidiary of Micron Technology in Taiwan Province of China, and its Taichung factory union said on Wednesday that the two sides had signed a labor agreement covering a number of issues, and the two sides withdrew from the mediation originally scheduled for October 22 as a result. The joint statement did not disclose the terms of the agreement; it only stated that the company and the trade union will separately communicate details to affected employees in the next few days.
Key economic data and event forecasts
21:00 Beijing time: Bank of England Governor Bailey delivered a speech
22:30 Beijing time: US Energy Information Administration (EIA) crude oil inventory changes
00:00 Beijing time the next day: ECB President Lagarde delivered a speech
Performance Forecast
Thursday morning: Tesla, Meta Platforms (META.US), IBM (IBM.US), Fanlin Group (LRCX.US), Texas Instruments (TXN.US), Southwest Airlines (LUV.US), SAP (SAP.US)
Thursday pre-market: Nokia (NOK.US), Spotify (SPOT.US), Procter & Gamble (PG.US), Union Pacific (UNP.US), Valero Energy (VLO.US), American Airlines (AAL.US)