Stocks Climb, Oil Sinks At Start Of Pivotal Week: Markets Wrap

A sense of relief percolated through markets after Israel’s retaliatory strikes against Iran avoided oil facilities, with crude oil tumbling and stocks rising at the start of what’s shaping to be a pivotal week for investors.

Iran said its oil industry was operating normally following Israel’s attacks on military targets across the country. That brought some easing in geo-political tension as markets prepare for a week packed with corporate earnings and key economic data, with the US presidential election also drawing near.

“The measured and targeted response from Israel has increased hopes of de-escalation,” Warren Patterson, head of commodities strategy at ING in Singapore, wrote in a note. “If we do see some de-escalation it would allow fundamentals once again to dictate price direction.”

Oil slumped more than 5% at one point, while gold also edged lower. Israel’s shekel strengthened the most among about 150 currencies tracked by Bloomberg.

Equity-index futures signaled a rebound on Wall Street after the S&P 500 clocked its first weekly decline in seven. Airlines, whose fuel costs are linked to oil prices, were among the biggest gainers in premarket trading, while energy stocks declined. Boeing Co. fell after Bloomberg reported the beleaguered aircraft maker is planning a capital raise.

The 10-year Treasury yield rose about four basis points to 4.28%, while a gauge of the dollar was steady.

The Stoxx Europe 600 edged higher. Luxury stocks including LVMH and Hermes International SCA were among the leading gainers by index points, while energy majors Shell Plc, TotalEnergies SE and BP Plc weighed on the gauge.

“We continue to see strong investor appetite for stocks – they seem to be excited about the global rates-easing cycle while corporate earnings still remain positive,” said Marija Veitmane, a senior multi-asset strategist at State Street Global Markets. “The decline in oil prices as the Middle Eastern conflict is not escalating is also helpful.”

Among individual stock moves in Europe, Sonova Holding AG shares rose more than 5% after Zurcher Kantonalbank said Costco Wholesale Corp. will resume selling the company’s Sennheiser hearing aids. Royal Philips NV dropped 17% after the Dutch medical-technology firm cut its sales outlook. Porsche AG shares dropped after the German carmaker 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 “embrace the harsh light of fiscal reality” with tax hikes and extra borrowing in a make-or-break budget on Wednesday.

Magnificent Seven

Among other events this week are results for five of the “Magnificent Seven” big-tech behemoths, which are expected to post their slowest collective quarterly earnings expansion in six quarters, according to data compiled by Bloomberg Intelligence. Also on the horizon are eurozone and US growth prints as well as a payrolls report. And then there’s the presidential election on Nov. 5.

For the US bond market, already stung by the worst selloff in six months, the coming days will be crucial, as they feature the Treasury Department’s announcement on Wednesday on the scale of its debt sales.

“Things have already got going, with the weekend bringing a couple of developments that need to be dealt with immediately, before contemplating the mountain of event risk that looms like Everest over price action,” said Michael Brown, a senior research strategist at Pepperstone Group Ltd. “Further de-risking could well be seen short-term, with potential downside moves likely to be exacerbated were this week’s Big Tech earnings to fall short of expectations.”

In currency markets, the yen was in the spotlight with a drop to its weakest level in about three months against the dollar, after a gamble by Prime Minister Shigeru Ishiba to call a snap election backfired. The weaker yen, which benefits the nation’s export-oriented economy, helped push the Topix index up by as much as 1.8%.

Chinese shares edged lower after profits at industrial firms plunged in September, a challenge to the economy as deflationary pressures sap the strength of corporate finances. Meanwhile, China’s central bank unveiled a new tool to help it better manage liquidity.

Some of the key events this week:

• US job openings, Conference Board consumer confidence, goods trade, Tuesday
• Alphabet, HSBC, Santander earnings, Tuesday
• Australia CPI, Wednesday
• Eurozone consumer confidence, GDP, Wednesday
• Germany GDP, CPI, unemployment, Wednesday
• UK Chancellor of the Exchequer Rachel Reeves presents budget to Parliament, Wednesday
• US GDP, ADP employment, Wednesday
• Meta, Microsoft, UBS, Volkswagen earnings, Wednesday
• US Treasury Department holds quarterly refunding announcement of bond-auction plans, Wednesday
• Australia retail sales, Thursday
• China Manufacturing and non-manufacturing PMI, Thursday
• Eurozone CPI, Thursday
• Bank of Japan policy decision, Thursday
• US PCE data, Thursday
• Canada GDP, Thursday
• Amazon, Apple, Samsung earnings, Thursday
• China Caixin manufacturing PMI, Friday
• UK S&P Global Manufacturing PMI, Friday
• US nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 9:21 a.m. London time
• S&P 500 futures rose 0.6%
• Nasdaq 100 futures rose 0.7%
• Futures on the Dow Jones Industrial Average rose 0.5%
• The MSCI Asia Pacific Index rose 0.3%
• The MSCI Emerging Markets Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.0816
• The Japanese yen fell 0.5% to 153.11 per dollar
• The offshore yuan fell 0.1% to 7.1432 per dollar
• The British pound was little changed at $1.2971

Cryptocurrencies

• Bitcoin rose 0.9% to $68,265.04
• Ether rose 0.8% to $2,510.13

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.27%
• Germany’s 10-year yield advanced two basis points to 2.31%
• Britain’s 10-year yield advanced two basis points to 4.25%

Commodities

• Brent crude fell 5.3% to $72.01 a barrel
• Spot gold fell 0.6% to $2,732.14 an ounce

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