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Markets Update: APAC Stocks Retreat; ASX 200 Buoyed by Energy and Mining, Shanghai Composite Dips, Hong Kong Trade Delayed; European Futures Point to Lower Open Amid Geopolitical Tensions.
Economic Calendar
Global Markets Roundup: 09 Oct 2023
APAC stocks were mostly lower in holiday-quietened conditions on Monday, with investors cautious following a surprise multi-front attack by Hamas on Israel. European equity futures are indicative of a lower open, with the Euro Stoxx 50 future down 0.3% after the cash market closed up 1.1% on Friday.
Crude futures have seen intraday gains of more than 5% after Hamas' attack on Israel.
The US dollar index (DXY) is marginally firmer, while EUR/USD hovers around 1.0550, USD/JPY trades on a 149 handle, and the antipodeans narrowly lag. Investors are focused on the geopolitical situation in the Middle East, as well as the upcoming US employment report.
The ASX 200 kept afloat on Monday, with gains led by strength in the energy and mining-related sectors as underlying commodity prices were lifted by the conflict in the Middle East and the return of Chinese buyers to the market.
The Shanghai Composite Index was pressured as participants returned from the Mid-Autumn Festival and National Day Golden Week holidays. Hong Kong trade was delayed for most of the day due to a typhoon no. 8 signal and black rainstorm warning, which further added to the already thinned markets caused by holiday closures in Japan, South Korea, and Taiwan.
FX The US dollar index (DXY) eked slight gains on Monday amid an early haven bid and following last week's better-than-expected headline jobs report. Fed Governor Michelle Bowman said over the weekend that it is likely appropriate to raise interest rates further and hold them restrictive for some time. EUR/USD was softer and continued on the recent pullback from resistance at the 1.0600 level.
GBP/USD weakened amid the mostly negative mood to test support at a floor near 1.2200.
USD/JPY traded rangebound amid the absence of Japanese participants although the yen was firmer against other major peers owing to its haven status. Antipodeans declined as geopolitical concerns offset the tailwinds from higher commodity prices.
The Israeli Shekel slumped to its lowest in nearly 8 years following the deadliest day of violence in Israel in 50 years since the Yom Kippur War. The Bank of Israel announced a program to sell up to USD 30 billion in FX and will provide liquidity to the market via a swap mechanism of up to USD 15 billion if necessary.
The PBoC set the USD/CNY mid-point at 7.1789 vs exp. 7.2945 (prev. 7.1798).
FIXED INCOME
10-year US Treasury futures gapped higher at the open in response to the Israeli-Hamas conflict although moved off intraday highs with further upside limited amid the closure of cash treasuries trade due to the market closure in Tokyo and with bond trade in the US shut on Monday for Columbus Day.
Bund futures rose above the 128.00 level with prices lifted amid the geopolitical risks.
COMMODITIES
Crude futures were boosted from the open and saw intraday gains of more than 5% after Hamas' deadliest attack on Israel, which Iranian officials reportedly helped to plan.
Saudi Arabia, Iraq, Kuwait, UAE, Oman, and Bahrain reaffirmed their commitment to collective and individual voluntary adjustments to oil production.
Iraq set the November 2023 Basrah medium crude price to Asia at +USD 2.10/bbl vs Oman/Dubai and to Europe at -USD 1.15/bbl vs Dated Brent, while it set the price to North and South America at -USD 0.25/bbl vs ASCI.
Iraq's Oil Minister said demand for oil would increase by around 2 million bpd next year and that the world still needs fossil fuels, while its Deputy PM for Energy Affairs said Baghdad shifted its focus to using natural gas for power generation. Iraq also said it had not received formal notification from Turkey that the oil pipeline bringing crude from Iraq is operational.
Chevron (CVX) continues to work with all parties to draft a final agreement based on the recommendation of the Australian Fair Work Commission in response to new strike threats. China released the 4th batch of 2023 crude oil import quota totaling 9.54 million tons. Finland's Gasgrid said it is preparing an operation to investigate the cause of a suspected gas pipeline leak and locate the possible leak point.
Pipeline repair work may take at least several months depending on the nature of the damage. Spot gold rose back above USD 1850/oz with early support amid a flight to safety. Copper futures were underpinned with demand helped by the return of the metal's largest buyer, China. Copper producers warned of a lack of mines to meet the demand for the metal.
Key economic data and events to watch on Monday include:
German industrial output
EZ Sentix Index
US employment trends
Speeches from Fed's Logan, Barr, and Jefferson, and ECB's de Guindos and Knot
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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