Recap –
Last week the S&P 500 rose 0.6%, the Nasdaq advanced 1% and the Dow Jones was up 0.6%. News that China would cut interest rates and undertake other stimulus measures to boost its economy encouraged optimism and supported metals and Chinese linked stocks. US GDP figures were on target at 3% and Inflation linked PCE index data came in below expectations at 2.2% on Friday, contributing towards positivity in the markets with most instruments moving higher. Stocks prices hit record highs. Gold prices also again hit record highs, while silver prices were sharply higher recording multiyear peaks. While Palladium prices pulled back last week, Platinum prices jumped to a more than two month high. Oil prices fell to end the week above $68. Natural gas prices hit a three month high on Friday.
This Week–
On Tuesday Iran launched missile attacks upon Israel with the latter promising to respond. Oil prices jumped above $70 on the news and Gold prices rose, but US stock prices fell in response, amid the prospect of a wider regional war. This week OPEC’s Joint Ministerial Meeting will take place on Wednesday, with expectations that the cartel will stick to its current deal. The other important economic event this week is Friday’s US Nonfarm Payrolls and Unemployment Rate data.
Stocks –
AMD
AMD’s stock price jumped 5.6% and recorded a two and a half month high on Friday. The chipmaker benefitted from positive sentiment surrounding chip stocks last week amid hopes that the US and global economy will see rising demand for its products. It was reported last week that AMD secured the lucrative contract for the PlayStation 6 chipset, beating rival Intel. The company is also set to host the Advancing AI event on October 10th to showcase its technology.AMERICAN AIRLINES
American Airlines stock prices climbed 5.4% by the end of the trading week to record a four month peak. The move higher could have been triggered by news that rival Southwest Airlines raised its third quarter revenue forecast. American Airlines is expected to post earnings on October 17th. Increased optimism in the airline industry comes amid a fall in the price of crude oil. This could be positive for airlines, since lower oil prices reduces jet fuel prices, which could cause airliners to cut ticket prices, leading to higher passenger numbers.
Commodities
Crude Oil
Crude oil prices declined 3.3% as worries continued that the market remains well supplied. Hurricane Helene and the temporary removal of up to 500,000 barrels per day underpinned oil prices, but news that Libyan oil was about to return to the market after political problems led to a shutdown output offset potential returns. Reports suggested that OPEC at the JMMC meeting on October 2nd would stick to the deal of unwinding production cuts from December and may also have pressured prices lower.
Gold
Gold prices moved 1.5% higher over the week, recording yet another record peak of over $2675 on Thursday. Tensions in the Middle East escalated further after another senior Hezbollah commander was killed, and the group called on Iran to attack Israel in response; leading to increased demand for safe haven instruments. A falling dollar and growing expectations that the Fed may opt for another sharper rate cut of 50 basis points in November were also influencing Gold’s price movements last week.
Natural Gas
Natural Gas prices jumped 6.5% to hit a three month high by Friday’s close, as the commodity made its fastest rising weekly move since May. Natural gas prices have been gaining ground as traders begin to look towards the winter season of high demand for energy. The commodity was also supported by Hurricane Helene which temporarily took out over 20% of Gulf gas production last week.
GBP/USD
The GBP/USD currency pair increased by 0.45% by close of trade on Friday, with the pair hitting a two-and-a-half-year peak. The move higher came after the Bank of England’s decision to hold interest rates at 5%, while most major central banks around the world including the Fed are expected to continue cutting rates, as the dollar trades at a more than one year low. Market participants tend to associate higher interest rates with an increase in the value of that currency and vice versa.