Daily Broad Market Recap – October 1, 2024

Volatility was relatively weak for most asset classes early with the exception of crude oil, where geopolitical headlines were front and center, before risk-off flows picked up.

Meanwhile, mixed leading US indicators, namely the ISM Manufacturing PMI and JOLTS employment data, continue to end net positive for the dollar.

Here are the market updates you need to know!

Titles:

• Japan’s Tankan Industrial Average for June: 13 (12 expected, 13 previous); Non-manufacturing index at 34 (previous 33, expected 32)
• Japan’s Au Jibun Bank’s final manufacturing PMI was revised higher from 49.6 to 49.7 in September.
• The Bank of Japan’s opinion summary highlighted uncertainties in external economies
• Iran launched a missile attack on Israel In response to the liquidation of the leader of Hezbollah
• Australian retail sales in August rose by 0.7% m/m (0.4% expected, previous reading raised from 0.0% to 0.1%).
• Australian building approvals fell by 6.1% m/m (-4.3% expected) in August, rise in July from 10.4% to 11.0%
• Australian commodity prices fell by 10.1% year-on-year in September, with the previous reading falling from a 5.4% decline to a 6.0% decline.
• Retail sales in Switzerland improved from 2.9% to 3.2% (2.6% expected) in August, July data was revised up from 2.7%
• Procure.ch Swiss Manufacturing PMI improved from 49.0 to 49.9 (47.9 expected) in September; The Services PMI fell from 52.9 to 49.8, with all subcomponents losing momentum
• Eurozone flash consumer price index for September 2024: 1.8% on an annual basis as expected, compared to 2.2% on an annual basis previously
• The final Eurozone HCOB manufacturing PMI was revised from 44.8 to a nine-month low of 45.0 (44.8 expected) in September.
• US ISM Manufacturing PMI for September: 47.2 (48.3 forecast; 47.2 previous); The price index fell to 48.3 compared to 54.0; The employment index fell to 43.9 from 46.0
• JOLTS JOBS IN US IN AUGUST: 8.04 million (7.64 million expected, 7.71 million previous)
• Swiss Central Bank official Martin Schlegel pointed out that Swiss inflation is driven only by the services sector
• New Zealand’s GDT auction delivered 1.2% gain in dairy prices (previously 0.8%)

Broad market price movement:

Major asset classes started the day consolidating, likely due to weak liquidity during Asian market hours while Chinese banks were closed for the holiday. The flows of risk aversion became evident as the day went on as geopolitical tensions in the Middle East continued to escalate.

As it turned out, Iran responded with a missile attack on Israel, following the latter’s ground invasion of southern Lebanon and in retaliation for the killing of Hezbollah leaders. Crude oil, which initially posted losses at the start of the London session, turned sharply higher later in the day since concerns about global supplies resurfaced.

Gold also benefited from safe-haven demand, as the precious metal rose and closed at $2,663.23 per ounce. On the flip side, US stocks succumbed to risk aversion, with the Dow Jones falling 200 points and the S&P and Nasdaq closing down more than 1%, while the CBOE Volatility Index, also known as Wall Street’s fear gauge, hit a high of 20 points for today.

Forex market behavior: US dollar against major currencies:

Overlay of the US dollar against major currencies Chart by TradingView

Price action also looked mixed in the forex scene, with the USD/JPY pair off to a bullish start despite mostly positive economic data from Japan. The New Zealand dollar also recorded early losses, after mixed data points from New Zealand.

Meanwhile, the Australian dollar got a few bids during the Asian trading session thanks to upbeat retail sales data, which pointed to stronger growth in consumer spending of 0.7% month-on-month in August versus a previous rise of 0.1%.

The USD/JPY pair quickly regained its gains towards the end of the Asian trading session, while the AUD/USD fell to its open price as well. The EUR/USD pair, which was already on shaky ground ahead of the rapid CPI releases in the region, suffered further losses after the actual numbers reflected a slowdown in price pressures as expected.

Later, the US ISM Manufacturing PMI and JOLTS jobs data sparked mixed reactions from the US Dollar, with USD/JPY and USD/CHF continuing their downward path while higher yielding currencies (except the oil-linked CAD) continued their downward trajectory. They continued their declines in risk aversion.

Potential catalysts coming on the economic calendar:

• Chinese banks remain closed for the holiday
• OPEC and JMMC meetings continue
• Nonfarm employment change in the United States 12:30 pm GMT
• FOMC Member Hammack’s speech at 1:00 PM GMT
• Speech by FOMC Member Muslim at 2:05 PM GMT
• EIA crude oil inventories at 2:30pm GMT
• FOMC Member Bowman’s speech at 3:00 PM GMT
• FOMC Member Barkin’s speech at 4:15 PM GMT

All eyes and ears could be on key US jobs indicators, as traders brace for the release of the Non-Farm Payrolls (NFP) report on Friday. For today, we’ve got ADP Nonfarm Employment Change Report It is expected to show a slightly higher increase in employment for September.

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