SpaceX Seeks $30 Billion Debt to Buy Nvidia Chips

Summary

SpaceX is reportedly seeking $30 billion in investment-grade debt plus $10 billion in bank loans to buy Nvidia chips, pushing its five-year CDS spread to a record. Broadcom is reportedly lining up $50 billion of financing to buy OpenAI gear. Oracle is also seeking funds, while France's central bank chief said the country needs no ECB help. US 10-year yields edged back up in Asia after a strong 10-year note auction pulled them from overnight highs.

Equities

The FTSE 100 fell 0.8% to 10,458.5 points late on Wednesday, ending a three-session winning run as banks led declines. The FTSE 250 fell 0.7% to a three-week low, while higher bond yields and oil prices kept pressure on equities.

HSBC, Standard Chartered and Barclays fell between 3.4% and 4.5% at the close. HSBC was under additional pressure after reports that it plans deep job cuts in its UK wealth business as part of an AI-driven efficiency programme.

Pennon Group fell 20% on Wednesday, the largest fall on the FTSE 250, after the water utility launched a fully underwritten £550 million rights issue and cut its dividend to fund investment. Shell shares ended flat after the oil major said third-quarter refining margins were expected to rise to a record $42 a barrel from $24 in the previous quarter.

Sterling reached a 16-month high against the euro as concerns over French public finances weighed on the single currency. British house prices were unchanged in September after falling on an annual basis for the first time since 2023 in August.

US stocks closed lower late on Wednesday, with the Dow falling 0.66% to 51,180.17, while the S&P 500 and Nasdaq each lost 0.22%, to 7,801.75 and 27,538.69 respectively. The S&P 500 and Dow ended four-day winning streaks, while the Nasdaq fell for the first time in six sessions.

SpaceX fell 2.5% at the close after reports that Elon Musk's aerospace company was seeking $40 billion in financing to fund purchases of Nvidia chips. Chip stocks fell 1.2% after gaining more than 80% this year, while housing stocks and homebuilders dropped 2.3% and 2.9% respectively.

US Treasury yields remained in focus, with the 30-year yield reaching a 24-year high. Federal Reserve minutes showed divisions over the reasoning behind September's rate increase, while markets priced a 17.2% probability of another hike at the October meeting, down from 37.6% a week earlier.

Forex & Commodities

The US dollar was steady early on Thursday at 102.25 against a basket of currencies, remaining close to its strongest level in 18 months after rising late on Wednesday. Against the yen, the dollar was up early this morning at 158.2 yen. The euro was up at $1.120, while the British pound was unchanged at $1.321. The Australian dollar was down at $0.6955 and the New Zealand dollar was flat at $0.5602.

Federal Reserve minutes released on Wednesday showed policymakers were divided over the reasons for September's quarter-point rate increase, although most still considered further tightening appropriate and almost all saw upside risks to inflation. Markets continued to price an 81.7% probability that the Fed will leave rates unchanged at its meeting ending on October 28, up from 80.1% a day earlier.

The yen also responded to new Japanese economic data early this morning, with the dollar reversing a brief decline after Japan reported an August current account surplus of 4.062 trillion yen, above the 3.19 trillion yen median forecast.

Spot gold was little changed early this morning at $4,117 an ounce after falling to a two-month low on Wednesday. A firmer dollar and higher US Treasury yields had weighed on bullion, while markets continued to assess the likelihood of another Fed rate increase. Traders were pricing a 19% chance of an October hike and an 86% probability of a December increase.

Oil prices rose early this morning as concerns over Middle East supply persisted amid increased attacks on shipping in the Gulf and Strait of Hormuz. Brent crude was up at $102.3 a barrel, while WTI rose to $89.94.

US Gulf producers had shut in 25.08% of oil output as Hurricane Isaias approached, while US crude inventories fell by 3.2 million barrels in the week to October 2, more than the 1.7 million-barrel decline expected by analysts.