Overnight US stocks | The three major indices fell for the second day in a row, 10-year US bond yields rose to the highest level since 2007, WTI crude oil surged 4%

The Zhitong Finance App learned that on Tuesday, the three major indices fell for the second day in a row. Investors waited for the interest rate decision to be announced by the Federal Reserve. The market almost fully included expectations of a 25 basis point rate hike. The yield on the US benchmark 10-year Treasury bond rose to its highest level since 2007, reaching 5.041%.

[US stocks] At the close, the Dow fell 328.09 points, or 0.63%, to 52093.10 points; the S&P 500 index fell 34.25 points, or 0.45%, to 7585.73 points; the NASDAQ fell 204.84 points, or 0.78%, to 25981.57 points. Qualcomm (QCOM.US) rose 4%, Oracle (ORCL.US) fell 3%, and SK Hynix (SKHY.US) fell 0.4%. The Nasdaq China Golden Dragon Index closed down 1.1%, and Xiaopeng Motors (XPEV.US) fell 4.5%.

[European stocks] The German DAX30 index rose 0.78 points, or 0.00%, to 25415.84 points; the British FTSE 100 index fell 44.01 points, or 0.41%, to 10653.56 points; the French CAC40 index fell 27.50 points, or 0.34%, to 8090.28 points; the European Stoxx 50 index fell 22.73 points, or 0.36%, to 6237.65 points; Spain's IBEX35 index fell 6.46 points, or 0.03%, to report 19557.44 points; Italy's FTSE MIB index fell 102.27 points, or 0.20%, to 51526.50 points.

[Asian stock market] The Nikkei 225 index fell slightly, and the Korea Composite Index fell 0.85%.

[US Dollar Index] The US dollar index, which measures the US dollar against six major currencies, rose 0.23% on the same day and closed at 99.616 at the end of the foreign exchange market. As of the end of the exchange market in New York, 1 euro was worth 1.1543 US dollars, lower than 1.1557 US dollars on the previous trading day; 1 pound was worth 1.3481 US dollars, lower than 1.3511 US dollars on the previous trading day. 1 US dollar was worth 155.09 yen, up from 154.05 yen on the previous trading day; 1 US dollar was worth 0.8185 Swiss franc, higher than 0.8163 Swiss franc on the previous trading day; 1 US dollar was worth 1.3917 Canadian dollars, higher than 1.3902 Canadian dollars on the previous trading day; 1 US dollar was worth 9.7773 SEK, up from 9.7412 SEK on the previous trading day.

[Cryptocurrency] Bitcoin fell more than 4% to 75,346 yuan as of press release; Ethereum fell more than 5.7% to 2,386 US dollars.

[Crude oil] Light crude oil futures for October delivery on the New York Mercantile Exchange rose $4.44, or 4.38%, to close at $105.83 a barrel; London Brent crude oil futures for November delivery rose $3.07, or 2.9%, to close at $108.75 a barrel.

[Precious Metals] Spot gold fell to 4293.55 US dollars/ounce; spot silver reported 63.672 US dollars/ounce.

[Macro News]

The cost of shipping US oil to Asia soared to a record high of 44.8 million US dollars. Transportation costs of U.S. crude oil to Asia have risen to a record high due to concerns about supply disruptions in the Middle East. According to data from the Baltic Sea Exchange, as of Tuesday, the cost of renting a very large tanker (VLCC) to transport 2 million barrels of US Gulf crude oil to Asia was about US$44.8 million, a record, a further increase from the previous day's US$39 million. Prior to the outbreak of the war in Iran, the shipping cost of this route was approximately US$17.8 million. As the situation in the Middle East disrupts energy supply, U.S. crude oil has become an important source to fill the supply gap. Saudi Arabia previously closed the east-west oil pipeline connecting the east and west coasts, heightening market concerns about supply risks in the Strait of Hormuz. Despite the sharp rise in freight rates, Asian buyers are still willing to bear higher transportation costs because US WTI crude oil still has a price advantage over other competitive crude oils after arriving in Asia. According to data from research institute Kpler, six very large tankers are already planning to load crude oil from the US Gulf of Mexico to Asia in October.

Vance said the US-Iran war will enter a “completely different phase” after a few months. According to reports, US Vice President Vance said that the US-Iran war will “enter a completely different phase in a few months.” He agreed with Trump that the US-Iran conflict could end after the midterm elections. Vance said that shipping in the Strait of Hormuz is being resumed, Iran's control over the strait is declining, and traffic volume has now returned to more than 50% of normal levels. He said that the US is not currently carrying out offensive operations, but is responding to Iran's attacks on commercial ships. Vance said that the US-Iran conflict is divided into two stages. The first stage aims to destroy Iran's nuclear program and reduce its conventional military capabilities and regional projection capabilities; the second stage is to ensure that Iran cannot restore these capabilities and maintain regional stability. At the same time, he said that the future situation still depends on whether Trump will continue to expand his actions after the midterm elections, or whether Iran will be more willing to reach an agreement.

CBO: The five-month war with Iran cost the US 38 billion US dollars. Inflation is expected to rise by 0.5 percentage points early next year. The US Congressional Budget Office (CBO) said that the first five months since the Trump administration went to war against Iran have brought about 38 billion US dollars in direct costs to US taxpayers. According to the CBO, these expenses are mainly due to the consumption of ammunition and equipment supplements, additional missions, other military operations, and fuel costs. The report predicts that for every month the war continues, the US will also increase costs by at least 2 billion to 3 billion US dollars. If the conflict escalates, the costs may rise further. At the same time, the CBO said that due to the blockage of oil and gas transportation in the Strait of Hormuz, the war will push up the US inflation level. It is expected that the inflation target the Federal Reserve is concerned about in early 2027 will be 0.5 percentage points higher than the previous forecast, and core PCE inflation will also be 0.3 percentage points higher. Furthermore, the CBO claims that the war has consumed US ammunition stocks, and some stocks may take more than 5 years to be replenished, which may reduce America's ability to deal with other major conflicts. The report points out that if a major conflict requiring large stocks of missiles and ammunition occurs in the future, the US military production capacity and inventory replenishment rate may be under pressure.

Bezent supports Trump's $5,000 payment plan and says it won't increase the fiscal deficit. When questioned by lawmakers on Tuesday, US Treasury Secretary Bessent supported Trump's plan that if the Republican Party continues to control both houses of Congress, it will issue 5,000 US dollars in checks to adults in the US, and mitigated concerns about the cost of the plan from the outside world. “I think there's a way to do this without affecting the fiscal deficit,” Bezent said. Currently, financial markets are increasingly concerned about the growing size of the US government's debt. Bezent did not say how the costs of the plan would be offset, but said the Treasury Department has been working on the plan “for quite some time.” Nor did he mention that such payments might require congressional authorization. If congressional approval is indeed required, Bessent said he will work with House Representative Johnson to advance the proposal. Less than a week before Bezent made these remarks, Trump promised to pay a “dividend” of 5,000 US dollars. The plan is estimated to cost more than 1 trillion US dollars.

[Individual Stock News]

Huang Renxun: The AI industry does not need new safety regulations. Nvidia (NVDA.US) CEO Hwang In-hoon said at an event hosted by Salesforce on Tuesday that the AI industry “does not need any new laws or regulatory measures,” and he reiterated similar previous views that AI development must make a trade-off between safety and speed is a “false proposition.” Hwang In-hoon said that both can be achieved at the same time. “Companies can move forward at their own pace until they are convinced that the products they launch will be recognized by the market. The market power itself already exists. Businesses have the ability to decide for themselves not to release technology or products that may cause harm.” Earlier this week, Hwang In-hoon had a live phone call with US President Trump during an event. Both sides refuted recent opinions that AI development should be slowed down.

Amazon claims data recovery has been blocked at some AWS facilities in Bahrain and the UAE. Amazon (AMZN.US) Cloud Services (AWS) said that due to damage during the war between the US and Iran, some data centers in the Persian Gulf region are still unable to restore data access. AWS said in the latest status update that it is currently unable to access data stored only in Bahrain data centers and parts of the UAE network. Earlier, two AWS data centers in Bahrain were attacked and damaged in the early stages of the conflict, and the extent of damage exceeded the scope of their service design. AWS said that most customers have resumed operations by backing up or migrating to data centers in other countries, but the data in one availability zone in the UAE is still inaccessible, and the engineering team is repairing resources in two other availability zones. The company expects to further update the restoration of facilities in Bahrain early next year.

META plans to deploy a new self-developed ARKE chip in the first half of next year to showcase the cost reduction advantages of self-developed chips. According to reports, Meta Platforms (META.US) plans to begin deploying its new self-developed ARKE chips in data centers in the first half of next year. The company said this move will save costs and energy when running artificial intelligence models. The company first announced plans to independently develop AI chips as early as 2023, and is currently testing the third-generation product in this series, codenamed MTIA 450, or Arke. The next generation product — codenamed 500, or Astrid — will be designed in about a month and put into use in data centers by the end of 2027. Meta expects more widespread adoption of this product in the future. Jiun Song, vice president of engineering at Meta, said in an interview: “Each generation of chips carries higher technical risks, but performance has also improved significantly.” According to the report, the Meta Super Smart Lab helps fine-tune the chip by providing insight (that is, the inference phase) on future AI models and their operating requirements. Song said the end result is that when running AI models, these chips will perform more efficiently than “any product currently launched by Nvidia,” “simply because we have done a lot of engineering work ourselves.