Wall Street finished mixed for the week, thanks to a pullback in the US bond yields, taking pressure from equity markets. According to the Fed meeting minutes, the risks of over-tightening versus under-tightening were roughly balanced, which was more dovish than expected.
However, hotter-than-expected US inflation data strengthened the expectation of higher for longer rates, capping the early gains in the week. An escalation of the Hamas-Israel war caused a surge in oil prices on Friday, worsening inflation outlooks ahead of the US major tech earnings this week.
We’ve put together previews for Teslaand Netflix,for you to navigate the potential market movements. Markets seem to be optimistic about the upcoming quarterly earnings following positive results from the US big banks.
In Asia, the Chinese stock markets jumped as China imposed further stimulus measures to support the economy, with the Hang Seng Index up 1.6% for the week. However, investment sentiment remains fragile amid its property turmoil. China is set to report its third-quarter GDP this week, which is expected to slow down further from the second quarter due to weak domestic and international demands.
The Australian stock markets also finished in the green following Wall Street’s rally as jumping energy prices and China’s further support in its infrastructure boosted mining and energy stocks. Locally, the upcoming September employment data will provide clues for the country’s labour market conditions. A tight labour market may strengthen the odds for the RBA to continue raising the interest rates.
What are we watching?
- The US dollar continued to rise: The dollar index recovered its upside momentum, strengthening against the other G-10 currencies due to the risk-off sentiment sparked by the Hamas-Israel war.
- Tech stocks faced challenges: The US mega-cap tech stocks rebounded in the early of the week but pulled back sharply on Friday as markets flight haven assets, such as gold and bonds.
- Crude oil is on the rise: Oil prices faced upside pressure as the geopolitical tension may cause renewed sanctions on Iran’s oil exports, despite record-high US oil production.
- Gold surged: Spot gold soared $64 per ounce to 1,933 on Friday amid risk-off sentiment. The precious metal found key support around 1,848 and may continue rising towards further resistance of around 1,970.