Stocks Climb, Oil Sinks at Start of Pivotal Week: Markets Wrap

(Bloomberg) — A sense of relief percolated through markets after Israel’s retaliatory strikes against Iran avoided oil facilities, with crude tumbling and US stock futures 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 eased geo-political tensions as markets prepare for a week packed with key economic data and corporate earnings.

Among those are results for five of the “Magnificent Seven” big-tech behemoths, as well as eurozone and US economic-growth prints and a monthly payrolls report. And then comes the presidential election on Nov. 5, with markets increasingly pricing in a stocks-boosting victory for Donald Trump and the Republicans.

“Four factors are driving US equities higher right now: better macro data, solid third-quarter earnings, rising expectations of a Republican sweep and lower risk of an escalation in the Middle East,” said Wolf von Rotberg, an equity strategist at Bank J. Safra Sarasin. “On the earnings side, five Magnificent Seven names are reporting this week, which are likely to provide another lift to S&P 500 earnings growth.”

Oil slumped more than 6%, while gold also retreated. Israeli jets struck military targets across Iran on Saturday, delivering on a vow to retaliate for a missile barrage at the start of the month, though the attack was more restrained than expected. 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.

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

‘Strong Appetite’

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.

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%.

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

• S&P 500 futures rose 0.6% as of 6:33 a.m. New York time
• Nasdaq 100 futures rose 0.7%
• Futures on the Dow Jones Industrial Average rose 0.5%
• The Stoxx Europe 600 was little changed
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.0813
• The British pound was little changed at $1.2968
• The Japanese yen fell 0.2% to 152.54 per dollar

Cryptocurrencies

• Bitcoin rose 1.5% to $68,678.41
• Ether rose 1.8% to $2,533.84

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.26%
• Germany’s 10-year yield was little changed at 2.28%
• Britain’s 10-year yield was little changed at 4.23%

Commodities

• West Texas Intermediate crude fell 6.2% to $67.31 a barrel
• Spot gold fell 0.6% to $2,731.22 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Catherine Bosley.

©2024 Bloomberg L.P.