Oil Jumps After China Eases Mobility Restrictions, FTX Files Bankruptcy

Barry Adams
11 Nov, 2022
New York City

Stocks on Wall Street struggled a day after benchmark indexes soared the most in one-day in two years. 

Major averages are trending lower but still set to rise between 5% and 6%% for the week after October inflation cooled. 

The S&P 500 index declined a fraction in early volatile trading and the Nasdaq Composite index rose 0.4% to 11,160.58.

Mood on Wall Street was also cautious after the largest cryptocurrency exchange FTX filed for bankruptcy protection and CEO Sam Bankman-Fried resigned. 

The cryptocurrency exchange is also facing investigations from the U.S. Department of Justice and the Securities and Exchange Commission. 

The company is also alleged to have dipped into the customer accounts and used the assets as collateral for related party transactions. 

 

China Eases Restrictions But Warns of Rising Infections

Energy prices rose after China eased some of the coronavirus-linked stringent mobility restrictions.  

China, a day after top officials reiterated the need for stringent lockdowns, suggested improvement to current rules. 

The revised rules trimmed the quarantine requirements to five days from seven, cut PCR test to one from two prior to 48 hours of air travel and said it will crack down on arbitrary lockdowns and punish responsible officials. 

The National Health Commission also warned that infections are likely to spread with the arrival of winter and virus mutation.  

Chinese stocks rose and energy prices advanced after Guangdong province immediately implemented revised mobility restrictions. 

Crude oil increased $3.50 to $89.48 a barrel and natural gas futures rose 8 cents to $6.32 a thermal unit. 

Gold edged up 0.3% to $1,760.34 an ounce and silver fell 22 cents to $21.45 an ounce. 

 

Stable Treasury Yields

The yield on 2-year Treasury notes declined to 4.33%, 10-year Treasury notes eased to 3.83% and 30-year Treasury bonds fell to 4.08%.  

 

U.S. Movers 

Beazer Homes added 1.7% to $12.53 after the homebuilder reported revenue and earnings ahead of expectations in its latest quarter.

Rising home prices and improving gross margin drove the better performance in the quarter.

Homebuilding gross margin increased 330 basis points to 22.6% and average home price increased 22% to $510,700.

Doximity Inc soared 20% to $31.60 after the online platform for healthcare professionals reported better-than-expected quarterly results.

For the December quarter, the company guided revenue between $110.7 million and $111.7 million.

The company also launched a $70 million stock repurchase plan to be executed over the next twelve months.

Duolingo Inc fell 3.3% to $83.30 and the online language platform operator reported a smaller loss and lifted its annual outlook.

Monthly active users increased 35% to 56.1 million, daily active users rose 51% to 14.9 million and paid subscribers jumped 68% to 3.7 million.  

The company estimated fourth quarter revenue between $98 million and $101 million and full-year 2022 revenue between $364 million and $367 million.

LegalZoom.com, Inc  soared 15% to $10.92 and the online legal documents and advice provider reported smaller-than-expected quarterly loss and lifted its full-year revenue estimate.

The company guided fourth quarter revenue between $145 million and $147 million and full-year 2022 revenue between $617 million and $619 million.

US Bancorp fell 0.3% to $44.75 and Warren Buffett-controlled Berkshire Hathaway lowered its stake in the bank to 53 million shares of 3.6%, according to a regulatory filing with the SEC.

Berkshire has sold 91 million shares in the year so far and slashed its holding in the financial services company.

Wynn Resorts added 3.2% to $74.58 and  Las Vegas Sands added 4.3% to $43.85 after China loosened Covid-19 restrictions.

Both companies have a significant presence in Macau, China, a tourist and travel destination for Chinese citizens.  

 

European Markets Advance, UK GDP Shrank 

European markets traded sideways after the UK GDP shrank less-than-expected. 

The weakness in the service sector dragged the GDP down 0.2% in the September quarter from the previous quarter, but the economy expanded 2.4% from a year ago. 

High interest rates and inflation are expected to drag the economy into the longest recession since the record keeping began. 

The Bank of England has estimated the economy to shrink in the second half of 2022 and the weakness to persist in 2023 and 2024. 

The DAX index increased 0.3% to 14,183.75, the CAC-40 index added 0.4% to 6,581.42 and the FTSE 100 index declined 0.5% to  7,336.80. 

The yield on 10-year German Bunds increased to 2.14%, French bonds edged higher to 2.65%, UK Gilts advanced to 3.35% and Italian bonds inched up to 4.19%.