Global Market Update: Mixed Shares Amid Rising Oil Prices
World shares were mixed on Monday while oil prices pushed higher after the Israeli military reported that projectiles fired from Gaza set off sirens in central Tel Aviv, marking one year since the Oct. 7 attack by Hamas.
Following strong gains in Asia, shares fell in Europe. France’s CAC 40 edged down 0.1% to 7,530.43, Germany’s DAX lost 0.3% to 19,059.46, and the FTSE 100 in London was down 0.1% at 8,275.18.
The futures for the S&P 500 and the Dow Jones Industrial Average were down 0.4%.
Asian markets logged strong gains after a surprisingly strong U.S. jobs report raised optimism about the global economy, prompting a rally on Wall Street.
Japan’s Nikkei 225 index surged by 1.8% to 39,332.74, driven by a weakening yen against the U.S. dollar. The currency’s fluctuations stem from speculation regarding the central bank’s interest rate plans, particularly since Shigeru Ishiba took office last week. Lower interest rates typically boost asset prices, and both Ishiba and the central bank governor indicated that no hikes are likely soon.
Nintendo saw a notable increase of 4.4% with reports of a Saudi wealth fund intending to enhance its investment in the Kyoto-based video game maker.
In a policy speech on Friday, Ishiba emphasized the need for salary increases that outpace inflation and expressed intentions to promote investment, fostering a “virtuous cycle of growth and distribution.” He committed to providing economic support for low-income households and advocated for regional revitalization and disaster resilience.
Despite these intentions, Ishiba offered no major new initiatives, and his initial public support ratings hover around 50%, which is relatively low for a newly instated leader in Japan. He plans to dissolve parliament on Wednesday for an election set for October 27.
After a brief gain against the dollar, the yen weakened late last week. As of early Monday, the dollar was trading at 148.34 yen, down from 148.72 late Friday, while the euro rose to $1.0974 from $1.0967.
Elsewhere in Asia, Hong Kong’s Hang Seng index rose 1.6% to 23,099.78, and the Kospi in Seoul surged by 1.6% to 2,610.38, while Taiwan’s Taiex gained 1.8%.
Mainland Chinese markets are set to reopen from a weeklong holiday on Tuesday, with the government planning to provide details regarding recent economic stimulus plans at a news conference in Beijing. Just prior to the October 1 National Day holiday, announcements concerning policies aimed at revitalizing the ailing property market led to significant increases in share benchmarks, and further volatility is expected this week.
BofA Securities suggested in a research note, “More fiscal stimulus is essential to stabilize the property market, restructure local government debts, and implement structural reforms to address over-capacity and deflation issues in order to rejuvenate economic growth,” pointing to significant declines in home sales, housing prices, and credit growth.
On Friday, the S&P 500 climbed by 0.9% and approached its all-time high set last Monday. The Dow gained 0.8%, while the Nasdaq increased by 1.2%.
Recent tensions in the Middle East have driven oil prices sharply higher, as the global community anticipates Israel’s response to an October 1 missile attack by Iran.
The surprise cross-border barrage that struck Israel on a major Jewish holiday left the nation unprepared as it mourned the victims of the October 7, 2023 attack and dealt with the hostage crisis.
After slight losses earlier in the day, U.S. benchmark crude oil rose by $1.26 to $75.64 per barrel, while Brent crude, the international standard, gained $1.09 to settle at $79.14 per barrel.
The U.S. government reported on Friday that employers added 254,000 jobs to their payrolls last month, an acceleration from August’s addition of 159,000, significantly exceeding economists’ forecasts.
Recent positive data regarding the economy has boosted expectations that the job market will remain resilient, despite the Federal Reserve’s measures to apply the brakes on the economy through higher interest rates aimed at combating high inflation.
The Fed has begun cutting interest rates, and the encouraging jobs report has contributed to traders’ forecasts that no further half-point interest rate cuts will be issued before the year’s end, following September’s reduction.
