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Wall Street stocks slipped on Wednesday as investors weighed up signs of US economic resilience to higher interest rates and a flurry of company results.

The S&P 500 fell 0.5 per cent in early New York trade, with Morgan Stanley shares down 5.8 per cent after a big hit to profits in the third quarter. The Nasdaq Composite shed 0.7 per cent ahead of results from Netflix and Tesla.

The moves follow data on Tuesday showing stronger than expected US retail sales in September and figures released last week showing a small reacceleration in US headline inflation. The Atlanta Federal Reserve on Tuesday raised its estimate for third-quarter gross domestic product to 5.4 per cent from 5.1 per cent.

© Bloomberg

The rate of new home construction in the US increased in September, with single family housebuilding greater than a year ago despite higher mortgage rates. 

Housing starts in September increased 7 per cent from August, the US commerce department said. The key driver was an uptick in single family housing starts, up 3.2 per cent in the month and 8.6 per cent from a year earlier. 

Multifamily housing starts, a volatile sector, also boosted the increase even as they drove a 4.4 per cent monthly decline in permits to build homes, a leading indicator. 

Still, permits to build single family homes increased 1.8 per cent from August and 11.6 per cent year on year, a sign that single family housebuilding has persevered despite decades-high mortgage rates.

Fund managers have increased their exposure to energy and commodities, according to a closely watched investor survey, as investors changed their portfolio allocations in response to conflict in the Middle East and worsening geopolitical tensions.

Investors increased their positions in energy and commodities over the past month, with 23 per cent of managers citing “worsening geopolitics” as the biggest tail risk to global growth, according to Bank of America’s latest monthly poll, which took place between October 6 and 12.

The Israel-Hamas war that began on October 7 has caused stress in commodity markets. Brent crude, the international benchmark, was above $91 a barrel on Wednesday afternoon, up from $85 a barrel on October 6.

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Morgan Stanley reported a 9 per cent fall in third-quarter profits, as slower growth at the Wall Street firm’s juggernaut wealth management business compounded falling revenues in investment banking and trading.

Morgan Stanley on Wednesday reported third-quarter net income of $2.4bn, down from $2.6bn a year earlier and slightly ahead of analysts’ estimates for $2.3bn, according to data compiled by Bloomberg.

The bank’s net revenues for the three months were $13.3bn, up 2 per cent from $13bn a year ago and in line with estimates for $13.2bn.

“While the market environment remained mixed this quarter, the Firm delivered solid results,” chief executive James Gorman said in a statement.

Biden: US president Joe Biden is in Israel to show solidarity with the Jewish state and discuss a plan to get humanitarian aid to civilians in Gaza.

Tesla: Investors will want to see how the electric vehicle maker’s price cuts have affected its industry-leading margins when it reports quarterly earnings after the market closes. Netflix: Investors will be watching for updates on increases to Netflix’s subscription prices, the progress of its new advertising tier and the latest data on password sharing when the streamer reports earnings after the closing bell. Morgan Stanley: The investment bank’s revenue is expected to have declined by almost 2 per cent in the three months to September as dealmaking slowed. Housing: US housing starts are forecasted to have risen to an annualised rate of 1.38mn in September from 1.28mn in August.

Beige Book: The US Federal Reserve will release an anecdotal assessment of regional economic conditions gathered by each central bank branch.

Residential rental costs increased at the fastest annual rate since records began seven years ago, while house prices stagnated, laying bare the impact of high mortgage rates on the property market.

Private rents rose 5.7 per cent year on year in September, up from 5.6 per cent in July, and the largest annual percentage increase since the Office for National Statistics data series began in January 2016.

Annual private rental prices increased by 5.6 per cent in England, 6.9 per cent in Wales, and 6 per cent in Scotland last month. London’s annual percentage change in private rental prices was at its highest annual rate since the London data series began in January 2006.

Big share price moves on Europe’s stock markets today include takeaway delivery group Just Eat, UK housebuilder Bellway and Swedish bank Handelsbanken

Just Eat: The Netherlands-based online food delivery business was the morning’s biggest gainer, with its shares bouncing 6.7 per cent in early trading after it upgraded its profit guidance.

Svenska Handelsbanken: The Swedish lender was close behind, up 6.2 per cent after third-quarter earnings beat expectations.

Bellway: Shares in the UK housebuilder fell 4.5 per cent at the open after it reported a sharp fall in profits on Tuesday.

European stocks followed Asian markets lower early on Wednesday as oil prices rose following an explosion at a hospital in Gaza that threatens to derail diplomatic efforts to de-escalate the war between Israel and Hamas.

The region-wide Stoxx Europe 600 fell 0.6 per cent in early trade, while France’s Cac 40 lost 0.4 per cent and Germany’s Dax shed 0.2 per cent. London’s FTSE 100 fell 0.6 per cent after UK inflation held steady in September at 6.7 per cent.

Contacts tracking Wall Street’s benchmark S&P 500 and those tracking the tech-heavy Nasdaq 100 fell 0.3 per cent and 0.4 per cent, respectively, ahead of the New York open.

Prices for Brent crude, the international oil benchmark, rose 1.65 per cent to $91.40 a barrel. 

The UK’s inflation rate held steady in September at 6.7 per cent, maintaining the pressure on the Bank of England to stay firm in its efforts to curb price growth.

The rate of consumer prices inflation had been forecast to fall to 6.6 per cent in the 12 months ended September, according to economists polled by Reuters ahead of the release. 

The so-called core rate of inflation, which omits energy and food, eased to 6.1 per cent in the same period — down from 6.2 per cent in August but slightly higher than the 6 per cent forecast by economists.

Chinese equities fell in Wednesday afternoon trading, in a tepid reaction to China’s stronger-than-expected economic growth.

Hong Kong’s Hang Seng index lost 0.2 per cent and mainland China’s CSI 300 fell 0.8 per cent. South Korea’s Kospi was flat while Japan’s Topix added 0.2 per cent.

China’s gross domestic product rose 4.9 per cent year on year in the third quarter, beating the 4.5 per cent forecast by analysts polled by Reuters.

However, a 9.1 per cent decline in property investment and a 0.6 per cent drop in private sector investment in the first nine months of the year highlighted a downturn in consumer and business confidence.

Nvidia chief Jensen Huang, left, and Foxconn chair Young Liu unveil the companies’ plan to collaborate on ‘AI factories’ at Foxconn’s tech day in Taiwan on Wednesday © AFP via Getty Images

Nvidia and iPhone maker Foxconn have said they will build “artificial intelligence factories” together as the Taiwanese electronics manufacturer seeks to diversify its business.

The announcement comes a day after the US said it was tightening rules on AI chip sales to China, in a blow to Nvidia and other companies selling high-performance semiconductors in the country.

Nvidia co-founder and chief Jensen Huang said on Wednesday that the $1.1tn chip group would set up “AI factories”, or large data centres, with Foxconn to train autonomous vehicles, robotics platforms and large language models.

Read more about Nvidia an Foxconn’s plans here.

China’s president Xi Jinping lauded record high trade with Russia and his “deep friendship” with Vladimir Putin in a meeting of the two leaders in Beijing on Wednesday.

Xi said annual bilateral trade had reached a “historic high” of nearly $200bn that would probably be exceeded this year and celebrated his close relationship with Putin, with whom he has met 42 times over the past decade.

The Chinese leader’s feting of the relationship comes despite repeated warnings from Europe that Beijing’s failure to condemn Russia for its invasion of Ukraine was souring ties with the EU, one of China’s biggest trading partners.

Crude prices jumped on Wednesday as violence in Gaza stoked fresh concerns that the conflict between Israel and Hamas could disrupt supply elsewhere in the region.

Brent crude, the global benchmark, rose as much as 2.5 per cent to $92.18 a barrel, while US marker West Texas Intermediate climbed as much as 2.8 per cent to $89.09. Both benchmarks hit their highest levels in about two weeks.

The latest jump in oil prices followed a deadly explosion at a hospital in Gaza that came just hours before US President Joe Biden was set to arrive in Israel.

BHP and Japan’s Mitsubishi have sold two coal mines in Queensland to Sydney-listed Whitehaven for $3.2bn as part of the mining company’s move away from fossil fuels.

BMA, an alliance between BHP and Mitsubishi, put the Blackwater and Daunia metallurgical coal mines up for sale, with Whitehaven selected as the preferred bidder. Whitehaven shares gained 8 per cent on the deal, which it said would expand its customer footprint and growth profile.

BHP has sold or wound down a number of its legacy coal assets in recent years and merged its oil and gas business with Woodside. It still retains a number of Queensland coal mines to supply steelmakers in markets like India.

Semiconductor-related stocks in Asia sold off after the Biden administration expanded efforts to limit China’s access to advanced computer chip technology.

The Hong Kong-listed shares of Lenovo, which uses US chipmaker Nvidia’s chips in one of its upcoming products, fell 7 per cent on the news.

Nvidia warned on Tuesday that tighter controls “may impact the company’s ability to complete development of products in a timely manner”, dragging its shares down almost 5 per cent.

Taiwanese chipmaker TSMC also dropped 1 per cent and South Korea’s SK Hynix dropped 2 per cent on Wednesday.

© Bloomberg

Shares in China’s largest electric vehicle maker BYD climbed 7.4 per cent on Wednesday after the company forecast strong growth in its third-quarter earnings, boosted by robust car sales and increased market share.

BYD estimated its net profit for the July-September period at Rmb11.5bn, compared to Rmb5.7bn a year earlier, according to a Hong Kong stock exchange filing late on Tuesday.

BYD sold 835,299 passenger cars in the third quarter, including purely electric vehicles and plug-in hybrids. In September, BYD maintained its top spot in China’s car market with a 25.8 per cent share.

© Bloomberg

Spot gold prices rose to their highest level in four weeks on Wednesday, as concerns over conflict in the Middle East buoyed demand for safe-haven assets.

Gold added as much as 1 per cent to reach a high of $1,942.85 a troy ounce before paring gains to be up about 0.8 per cent.

Israel’s military has bombarded Gaza with air strikes in anticipation of a widely expected ground invasion against Hamas, which launched an incursion into southern Israel this month.

The potential for conflict to escalate into a broader regional conflagration has increased demand for assets traditionally deemed safe.

The X logo pictured above the headquarters of the company, formerly known as Twitter, in San Francisco © REUTERS

Elon Musk’s X has said it is testing a subscription model where it will charge $1 a year to new web users for features such as sharing or liking posts, as part of efforts to rid bots from the social media platform.

In a post on Wednesday, the company formerly known as Twitter said that the new subscription method would be first introduced in New Zealand and the Philippines. Users will be charged the $1 fee in order to post content, like, share or reply to posts on the web version of X.

New users who opt out will only be able to read posts, watch videos and follow accounts, it said.

President Xi Jinping has sought to steer China’s economy away from debt-fuelled property investment and towards high-tech manufacturing © AFP via Getty Images

China’s gross domestic product grew 4.9 per cent year on year in the third quarter, beating market expectations and picking up from the previous three months.

The economy expanded 1.3 per cent on a quarterly basis, China’s National Bureau of Statistics said, regaining some momentum after growth of just 0.5 per cent in the April-June period.

Economists polled by Reuters had expected third-quarter year-on-year growth of 4.5 per cent. Wednesday’s figure compares with year-on-year GDP growth of 4.5 per cent in the first three months of the year and 6.3 per cent in the second quarter.

Read more about the Chinese economy here.

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Asian stocks fell on Wednesday, following US markets lower after stronger than expected retail sales data increased concerns over elevated interest rates.

Japan’s Topix fell 0.2 per cent while South Korea’s Kospi was flat. Hong Kong’s Hang Seng index and China’s CSI 300 opened 0.5 per cent and 0.2 lower, respectively.

US stocks were muted on Tuesday after strong retail sales data fuelled concerns of tighter monetary policy from the Federal Reserve.

The S&P 500 ended flat, while the Nasdaq Composite dropped 0.3 per cent.

US president Joe Biden plans to ask “tough questions” to understand Israel’s objectives when he meets with Israeli prime minister Benjamin Netanyahu and his team on Wednesday, the White House said.

“He’ll be asking some tough questions but he’ll be asking them as a friend,” US National Security Council spokesman John Kirby said Tuesday. “He’ll ask questions about their intentions and their plans.”

After he spoke with Jordan’s King Abdullah and Palestinian Authority president Mahmoud Abbas made it clear he wished to return home to the West Bank to observe three days of mourning, Biden decided it would not be appropriate to visit Jordan.

Chinese economy: China releases third-quarter economic growth data as Beijing chases a target of 5 per cent gross domestic product growth this year. Here are five things to look for in the latest figures.

Russia-North Korea: Russian foreign minister Sergei Lavrov visits North Korea days after the US accused Pyongyang of providing weapons to Moscow for its war in Ukraine.

Taiwan: Foxconn holds its technology day, where the electronic components manufacturer is expected to tease its latest electric vehicles.

Joe Biden said he was “deeply saddened” by the “explosion” at a hospital in Gaza that killed scores of civilians on Tuesday, and asked his national security team “to continue gathering information about what exactly happened”.

In a statement issued while he was on a flight to Israel, Biden said he had spoken to Israeli prime minister Benjamin Netanyahu and King Abdullah II of Jordan after the strike on the hospital.

Officials in Israel and Gaza have blamed each other for the attack, but Biden did not attribute it to either side. Biden was forced to scrap a planned stop in Jordan to meet Arab leaders on Wednesday as outrage over the hospital attack flared up across Middle Eastern capitals.

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Activist investor Carl Icahn said his company has sued current and former board directors at Illumina concerning its acquisition of gene-sequencing company Grail.

Last week, the EU competition watchdog ordered Illumina to divest Grail and said failure to comply could lead to major fines.

The lawsuit was filed on Tuesday under seal in the Delaware Court of Chancery. It lists current and former Illumina board directors as defendants.

Icahn said he filed the lawsuit due to “the board’s . . . actions relating to closing the acquisition of Grail without regulatory approval, thus putting Illumina . . . in harm’s way”. He added that the actions had “cost the company billions.”

A spokesman for San Diego-based Illumina said the company is reviewing the complaint.

© Reuters

Venezuela’s government and opposition have reached a deal to hold presidential elections in the second half of next year, as the US mulls relaxing oil sanctions.

The two sides — which have not sat at the negotiating table since November last year — also agreed to resume talks to open political space in the authoritarian country at a ceremony in Barbados on Tuesday.

The resumption of negotiations, mediated by Norway, comes ahead of the opposition’s primary on Sunday, and amid wider talks between the socialist government of Nicolás Maduro and the US on a relaxation of oil sanctions in exchange for guarantees of a free and fair election. The sides also agreed to allow international observers for the election.

US stocks were subdued on Tuesday and government bonds remained under pressure, after stronger-than-expected retail sales data fuelled concerns over tighter monetary policy.

The S&P 500 share gauge ended the session flat, while the technology-heavy Nasdaq Composite dropped 0.25 per cent, trimming steeper declines earlier in the day.

Sentiment was more downbeat in the Treasury market. The two-year yield — which closely tracks interest rate expectations — lurched 0.12 percentage points higher to 5.22 per cent as the debt instrument’s price fell. The benchmark 10-year yield rose 0.13 percentage points to 4.84 per cent.

The moves on Tuesday came as fresh data showed US retail sales rose more than anticipated in September.

The UK government has agreed to meet senior NHS doctors after they offered to hold off from further strike action in exchange for discussions over pay.

Health secretary Steve Barclay would hold talks “in the hope we will find a resolution and end the dispute”, his department announced on Tuesday.

Consultants represented by the British Medical Association have carried out a number of strikes across the NHS since December while calling on the government to improve its pay offer to all doctors.

Ministers have continued to insist that the recommendation of the independent pay review body on pay is final.

Read more here.

Lockheed Martin executives are “optimistic” about the US providing additional funding for several geopolitical hotspots as Congress is embroiled in fights over the House speakership and the domestic budget.

In any budget scenario, “there continues to be the option for supplemental requests related to support Ukraine, Israel and potentially Taiwan,” chief executive Jim Taiclet told analysts on Tuesday.

Lockheed’s missiles business in particular has been boosted following the war in Ukraine, thanks to demand for tactical strike missiles. Chief financial officer Jay Malave said that based on orders for other weapons, there is a “foundation for growth over the coming years.”

Sales within Lockheed’s aeronautics business fell 5 per cent, owing to lower sales of its F-35 fighter jet.