Global bonds rally as euro zone inflation overcomes
Gold and oil prices soar on news of “Iran’s imminent attack on Israel”
Photo = REUTERS On the 1st (local time), the first trading day of the fourth quarter and the first trading day of October, the U.S. stock market started lower ahead of the release of employment and economic data amid heightened tensions in the Middle East.
Earlier in the day, stock prices fell sharply after the White House said there were signs that Iran was preparing to attack Israel with ballistic missiles. On the other hand, gold soared.
The Nasdaq Composite plunged more than 1.2% as of 10 a.m. ET, while the S&P 500 fell about 0.9%. The Dow Jones Industrial Average fell 0.7%. Gold recorded $2.692 per troy ounce, up 1.2% from the previous day.
Brent crude oil, the international oil benchmark, surged 2.9% to $73.77 immediately after the White House announcement, and West Texas Intermediate (WTI) surged 3.3% immediately after the White House announcement to trade at $70.47 per barrel.
The United States is actively supporting preparations to defend Israel against a potential attack that could have serious consequences for Iran, according to a White House official who spoke on condition of anonymity.
Meanwhile, with the announcement that Eurozone inflation had been overcome on this day, European bonds rallied and U.S. bonds also rose (=bond yields fell).
The yield on 10-year government bonds was 3.733%, a significant drop of 7 basis points (1bp=0.01%) from the previous day. The yield on 2-year government bonds fell 2.6bp to 3.625%.
The Bloomberg Dollar Spot Index rose 0.2%. The Japanese yen fell 0.2% to 143.91 yen per dollar.
The S&P 500 and Dow closed at record highs after Federal Reserve Chairman Jerome Powell mentioned the possibility of two more interest rate cuts of 0.25% each this year, saying, “The overall U.S. economy remains on a solid footing.” .
As of 9 a.m. today, CME Group’s FedWatch predicts a 61.5% chance of a 0.25% interest rate cut at the November meeting.
September is usually the worst month of the year for stocks, but this time it broke past trends. All three major averages recorded monthly gains, and the S&P 500 ended September with gains for the first time since 2019. The S&P 500, Dow, and Nasdaq composite also finished the third quarter with gains.
The Bureau of Labor Statistics’ August Job Opening and Labor Turnover Survey will be released at 10 a.m. ET. S&P Global U.S. Manufacturing Purchasing Managers’ Index and ISM Manufacturing PMI figures will also be announced.
Guest reporter Kim Jeong-ah kja@hankyung.com
