(Bloomberg) — There was a sense of relief in markets after Israeli retaliatory strikes against Iran averted oil facilities, with crude oil falling and stocks rising at the start of what appears to be a pivotal week for investors.
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Iran said its oil industry was operating normally after Israeli attacks on military targets across the country. This has eased some geopolitical tensions as markets prepare for a week filled with corporate earnings and key economic data, with the US presidential election also approaching.
“Israel’s measured and targeted response has raised hopes for de-escalation,” Warren Patterson, head of commodities strategy at ING in Singapore, wrote in a note. “If we see some cooling that will once again allow fundamentals to dictate price direction.”
Oil fell more than 5% at one point, while gold also fell. The Israeli shekel achieved the highest strength among about 150 currencies tracked by Bloomberg.
Stock index futures pointed to a rebound on Wall Street after the S&P 500 index posted its first weekly decline in seven weeks. Airlines, whose fuel costs are linked to oil prices, were among the biggest gainers in pre-market trading, while energy stocks fell. Boeing retreated after Bloomberg reported that the beleaguered plane maker was planning a capital raise.
The 10-year Treasury yield rose about four basis points to 4.28%, while the dollar measure remained steady.
The Stoxx Europe 600 index rose. Luxury stocks including LVMH and Hermes International SCA were among the top gainers by index score, while energy majors Shell Plc, TotalEnergies SE and BP Plc weighed on the gauge.
“We continue to see strong investor appetite for equities – they appear to be excited about the global interest rate easing cycle while corporate earnings remain positive,” said Maria Veitman, chief multi-asset strategist at State Street Global Markets. “Lower oil prices as conflict in the Middle East does not escalate is also helpful.”
Among individual stock moves in Europe, shares of Sonova Holding AG rose more than 5% after Zurcher Kantonalbank said Costco Wholesale Corp will resume selling the company’s Sennheiser hearing aids. Royal Philips NV shares fell 17% after the Dutch medical technology company cut its sales forecasts. Shares of Porsche AG fell after the German automaker reported earnings that fell short of analysts’ expectations.
The UK’s benchmark FTSE 100 stock index underperformed after Prime Minister Keir Starmer said his government would “accept the harsh light of fiscal reality” with higher taxes and additional borrowing in a make-or-break budget on Wednesday.
The Magnificent Seven
Among other events this week are results from five of the “Magnificent Seven” big technology companies, which are expected to post the slowest collective expansion in their quarterly profits in six quarters, according to data compiled by Bloomberg Intelligence. Growth readings in the Eurozone and the US as well as the payrolls report are also on the horizon. Then there is the presidential election on November 5th.
For the US bond market, already suffering from the worst sell-off in six months, the coming days will be crucial, because they will include the Treasury Department’s announcement on Wednesday of the volume of its debt sales.
Michael Brown, a senior strategist at Pepperstone Group, said: “Things are really starting to get going, with the weekend bringing some developments that need to be dealt with immediately, before considering the mountain of looming Everest-like event risks in terms of price action.” “. “Further de-risking could be seen in the short term, with potential downside moves potentially exacerbated if Big Tech earnings this week fall short of expectations.”
In currency markets, the yen was in the spotlight as it fell to its weakest level in about three months against the dollar, after Prime Minister Shigeru Ishiba’s gamble to call early elections backfired. The weak yen, which benefits the country’s export-oriented economy, helped push the Topix index up as much as 1.8%.
Chinese stocks fell after industrial company profits fell in September, challenging the economy as deflationary pressures sapped the strength of companies’ finances. Meanwhile, China’s central bank unveiled a new tool to help it better manage liquidity.
Some key events this week:
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US Job Opportunities, Consumer Confidence and Commodity Trade Conference, Tuesday
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Alphabet, HSBC and Santander earnings on Tuesday
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Australian Consumer Price Index, Wednesday
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Eurozone consumer confidence, GDP, Wednesday
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German GDP, CPI, Unemployment, Wednesday
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British Treasury Secretary Rachel Reeves presents the budget to Parliament on Wednesday
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US GDP, Employment at ADP, Wednesday
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Meta, Microsoft, UBS and Volkswagen earnings on Wednesday
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The US Treasury is holding a quarterly announcement of redemption bond auction plans on Wednesday
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Retail sales in Australia, Thursday
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China manufacturing and non-manufacturing PMI, Thursday
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Eurozone consumer price index, Thursday
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Bank of Japan policy decision on Thursday
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US personal consumption expenditures data, Thursday
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Canada’s GDP, Thursday
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Amazon, Apple and Samsung earnings on Thursday
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China Caixin Manufacturing PMI, Friday
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UK S&P Global Manufacturing PMI, Friday
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US Nonfarm Payrolls Report, Friday
Some key movements in the markets:
Stocks
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The Stoxx Europe 600 Index was up 0.3% as of 9:21 a.m. London time
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S&P 500 futures rose 0.6%
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Nasdaq 100 futures rose 0.7%.
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Dow Jones Industrial Average futures rose 0.5%
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MSCI Asia Pacific Stock Index rose 0.3%
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MSCI Emerging Markets Index rises 0.2%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro rose 0.2 percent to $1.0816
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The Japanese yen fell 0.5 percent to 153.11 yen to the dollar
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The yuan in external transactions fell 0.1 percent to 7.1432 per dollar
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There was little change in the pound sterling at $1.2971
Cryptocurrencies
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Bitcoin rose 0.9% to $68,265.04
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Ethereum rose 0.8% to $2,510.13
Bonds
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The yield on 10-year Treasury bonds rose by three basis points to 4.27%.
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The yield on 10-year German bonds rose two basis points to 2.31%.
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The yield on British 10-year bonds rose two basis points to 4.25%.
Goods
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Brent crude fell 5.3 percent to $72.01 per barrel
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Gold in spot transactions fell 0.6 percent to $2,732.14 per ounce
This story was produced with assistance from Bloomberg Automation.
-With assistance from Catherine Bosley and Allegra Catelli.
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