China, the world's top graphite producer, announced export restrictions on certain graphite products crucial for EV batteries to protect national security. This sparks concerns about supply chain disruptions as demand for graphite from the surging EV sector soars, with automakers like Tesla rushing to find non-Chinese suppliers. Graphite makes up the largest portion of EV batteries by weight and is used extensively in anodes. Meanwhile, China also dominates refining over 90% of global graphite for battery use. The new curbs mirror July's limits on exports of semiconducting gallium and germanium, which effectively choked shipments. Analysts say graphite prices will likely rise, but the impact remains uncertain as the limits aren't a blanket ban.
Stocks in unison plunged by around 0.8% as the 10-year Treasury yield reached a 16-year peak nearing 5%. Tesla shares skidded after missing estimates, while Netflix leapt on new subscriber growth and price hikes, though semiconductors broadly dropped on continued sanctions. Taiwan Semiconductor, however, surged following upbeat results and signs of recovering demand.
Gold prices hit three-month highs around $1,980 an ounce on Friday, extending the previous week's gains for a second straight weekly advance, as an anticipated pause in Fed rate hikes coupled with a weaker dollar boosted the precious metal despite rising Treasury yields briefly touching 17-year peaks. Looking ahead, with volatility in the region expected to persist, supporting haven buying, gold is seen extending its climb towards the $2,000 level soon.
Oil prices extended gains and were poised for a second weekly increase as fears grew that the Israel-Gaza conflict could spread and disrupt supply from the oil-rich region. Meanwhile, the U.S. announced plans to begin refilling its Strategic Petroleum Reserve, seeking to purchase 6 million barrels of crude through 2024. At the same time, sanctions relief for Venezuela's oil industry was unlikely to require OPEC+ policy changes as the Latin American nation's production recovery was expected to be gradual.
Despite the dollar index steadying, most Asian currencies kept a tight range as traders remained wary of mixed Powell comments and Middle East tensions, although the yen was flat after a higher-than-expected CPI showed underlying inflation was still elevated. The 10-year Treasury yield's nearing 5% kept pressure on the yen near 150 per dollar. However, dollar gains were limited as money markets expected the Fed to stay on hold, and Powell's dovish tone led the dollar index to pare weekly gains.