As traders prepared for a larger confrontation after the US announced it was sending warships to the region, West Texas Intermediate rose beyond $86 per barrel and Brent reached $89 per barrel. According to The Wall Street Journal, Iranian security personnel assisted Hamas in organising their attack on Israel, raising the possibility of reprisals on Tehran.
In contrast to the euro and the pound, the dollar rose, while riskier currencies fell. Another popular haven for investors, the yen, grew stronger. Bonds from Australia and New Zealand also turned around early drops, while US stock futures continued to lose ground.
Investors have a lot to think about after the events over the weekend, according to Kyle Rodda, senior market analyst at Capital.com. “In the end, these events typically only affect financial markets in the short term, and it’s likely that this time will be no different. But for a few days until the dangers of escalation have significantly decreased, investors might remain uneasy.
On Sunday, the aftermath of the Israeli attacks resonated across Middle Eastern markets, pushing stocks down. Major regional equity indices declined, driven by a decline in Israel’s benchmark TA-35 stock index, which lost 6.5% and suffered its largest loss in more than three years.
Iran is a significant oil producer and a Hamas backer. The Strait of Hormuz, a crucial passageway that Iran has repeatedly threatened to restrict, may be put in jeopardy by any response against Tehran.
Reopens in China
A measure of Asian stocks showed little change, with energy shares increasing as a result of the high price of oil.
However, as soon as the market returned following the Golden Week holiday, shares plummeted in mainland China. Typhoon-related cancellation of the morning session in Hong Kong will be followed by a resumption of business in the afternoon. Friday’s 1.2% gain for the S&P 500 ended a four-week losing streak.
Despite the positive Golden Week numbers, Hao Hong, partner and chief economist at GROW Investment Group, said that China’s confidence was still shaky. he remarked on Bloomberg Television. “If you are a smaller business in China, you are still probably struggling because banks risk aversion makes it hard to lend to SMEs.”
Data indicated that while holiday-related tourism income increased on an annual basis, it only marginally exceeded its pre-Covid level, indicating that relatively subdued consumer sentiment is still a drag on the nation’s economic expansion.
The People’s Bank of China once again set the daily fixing at a stronger level than traders’ predictions, which led to a little increase in the offshore yuan.
There is no cash trading of Treasury bonds because the markets in South Korea and Japan are closed for a vacation.
Fears of Inflation
With investors still speculating about the likelihood of another Federal Reserve interest rate increase this year, rising oil prices might exacerbate already intense global inflationary pressures.
“Any extension of this to oil-producing countries, with Saudi Arabia in the lead, could make the price of crude oil more expensive, with negative inflationary effects for the West and would mean higher rates for longer,” said Guillermo Santos, head of strategy at Spanish private banking company iCapital.
As global bonds declined for a sixth consecutive week, yields on 10-year and 30-year Treasuries eased on Friday after reaching 2007 highs of roughly 4.9% and 5.1%, respectively. Unexpected job growth forced swaps dealers to estimate a 50/50 possibility of a rate increase by December.
According to the US nonfarm payrolls report, companies increased the hiring rate in September, adding 336,000 jobs, more than twice what economists had predicted. According to figures released by the Bureau of Labour Statistics on Friday, the unemployment rate remained at 3.8%.
Monday brings new Yuan loans to China.
Monday’s industrial production in Germany
Catherine Mann, a Bank of England policymaker, speaks on Monday
The annual World Bank and IMF meetings begin on Monday in Marrakech, Morocco.
Monday’s speech by Fed Vice Chair Michael Barr
Monday’s speech by Dallas Fed President Lorie Logan
Monday’s speech by Fed Governor Philip Jefferson
Tuesday’s Japan payments balance
The BOE releases the financial policy meeting minutes on Tuesday.
IMF releases its most recent global economic forecast on Tuesday.
Tuesday’s wholesale inventories in the US
On Tuesday, Fed Governor Christopher Waller will give the keynote lecture.
Neel Kashkari, president of the Minneapolis Fed, speaks on Tuesday
Wednesday’s CPI for Germany
NATO defence ministers will meet on Wednesday in Brussels.
On Wednesday, representatives from OPEC members and others will attend Russia Energy Week in Moscow.
Wednesday: US FOMC minutes, PPI
Fed Governor Michelle Bowman talks on Wednesday during meetings with the World Bank and IMF.
Thursday’s PPI and Japan machinery orders data
Asahi Noguchi, of the Bank of Japan, speaks on Thursday
Thursday’s industrial production in the UK
Thursday sees the release of the ECB’s September policy meeting report.
Huw Pill from BOE speaks on Thursday
US first claims for unemployment, CPI, Thursday
CPI, PPI, trade, and Friday in China
G20 central bankers and finance ministers meet on Friday as part of an IMF gathering.
IMF Managing Director Kristalina Georgieva and ECB President Christine Lagarde speak on a panel on Friday.
Friday’s industrial production in the eurozone
CPI for France, Friday
Speaking on Friday is BOE’s Andrew Bailey
US University of Michigan’s Friday survey of consumer sentiment
Results from Citigroup, JPMorgan, Wells Fargo, and BlackRock are released on Friday as the quarterly earnings season begins.
Friday’s speech by Philadelphia Fed President Patrick Harker
Several significant market changes include:
Stocks
As of 1:19 PM Tokyo time, S&P 500 futures were down 0.8%. On Friday, the S&P 500 increased 1.2%.
Nasdaq 100 futures decreased by 0.8%. Nasdaq 100 increased by 1.7%.
Shanghai Composite Index in China decreased by 0.7%.
S&P/ASX 200 in Australia increased 0.2%.
The Hang Seng futures in Hong Kong increased 1.6%.
Currencies
By 0.2%, the Bloomberg Dollar Spot Index increased.
EUR/USD dropped by 0.3% to $1.0554
Japanese yen increased by 0.1% to 149.15 yen per dollar.
To 7.2979 per dollar, the offshore yuan increased by 0.2%.
To $0.6354, the Australian dollar decreased by 0.5%.
Cryptocurrencies
Bitcoin’s price remained stable at $27,942.35
To $1,634.8, ether dropped by 0.1%.
The 10-year yield in Australia dropped two basis points to 4.52%.
Commodities
A barrel of West Texas Intermediate crude increased by 3.9% to $86.06.
At $1,852.63 per ounce, spot gold increased by 1.1%.