Recap –
Last week the S&P 500 rose 0.22%, the Nasdaq ticked up 0.1% and the Dow Jones climbed 0.09%. Iran’s attack upon Israel early last week dominated market sentiment and the threat of a wider war in the Middle East concerned stock traders and higher risk instruments. But the threat to regional oil supplies boosted oil prices which recorded its best week of returns in over a year. A speech from Fed Chair Powell early in the week played down the possibility of a sharper rate cut in November which sent the dollar higher and gold prices lower, despite some safe haven demand for the metal. Silver prices climbed to their highest level in eleven years on hopes of Chinese stimulus. Platinum and Palladium prices eased lower. Higher than expected NFP numbers were enough to send stock prices back into positive territory on Friday.
This Week–
All eyes will be on the Middle East as an Israeli attack upon Iran is expected to take place. It’s been confirmed that an Israeli attack upon Iran’s oil facilities is being considered, Iran stated it will respond to any attack and would consider targeting other countries oil supplies in the region in retaliation. The highlight of the economic week will be US CPI Inflation data on Thursday afternoon, expected to show a decline to 2.3%. However, Wednesday evening’s Fed Meeting Minutes could also provide clues on future Fed moves on rate cuts.Stocks –
ALIBABA
Alibaba’s stock price climbed 2.7% by close of business on Friday, after recording its highest level since January 2023. The e-commerce company rose following China’s decision to provide stimulus measures to strengthen its economic growth. In September the company upgraded its Hong Kong listing to primary status, which could attract up to $12 billion from Chinese investors on the mainland, according to Morgan Stanley.
CATERPILLAR
Caterpillar’s stock price increased by 2.1% and hit an all-time high of over $396 on Friday. The construction and mining equipment manufacturer recently jumped after China announced it would use fiscal and monetary stimulus measures to boost its economy; where the company has major interest in the housing market. The Fed’s interest rate cutting cycle also could lead to more construction activity which increases demand for its production.
AMERICAN AIRLINES
Commodities
Crude Oil
Crude oil prices soared by just over 9% as geopolitical tensions in the Middle East rose to fever pitch. Israel promised to respond to last week’s attack by Iran, and oil refineries and major oil distribution ports could be targeted. Iran has stated that if its oil networks are attacked it could strike Saudi, UAE or Azerbaijani oil supplies. Iran could also decide to close the Strait of Hormuz, an important transport channel for oil and (liquid) natural gas.
Gold
Gold prices edged 0.35% lower over the week, even amid rising demand for safe haven instruments. A potential Israeli attack upon Iranian nuclear and other facilities pared larger losses, but market participants were absorbing economic related events and data in the United States. Early in the week Fed Chair Powell poured cold water on the idea of a sharper rate cut in November, disappointing some traders. Friday’s above expectations NFP numbers appeared to confirm a likely rate cut of 25 basis points at the next Fed meeting.
Silver
Silver prices climbed 1.48% by the end of the week and recorded an eleven year high. Safe haven demand has underpinned the metal amid conflict between Israel and Iran. But news of Chinese stimulus which could help to boost Chinese economic growth, was also seen as an encouraging step. Silver is a crucial component in cars, computing and many electronic products and a growing global economy due to cuts in interest rates or stimulus could also see an increase in demand for silver.
EUR/USD
The Eurodollar pair fell sharply by 1.73% last week, to hit a seven week low. The Euro faced pressure early in the week after European Central Bank President Lagarde hinted that the bank could opt for an unexpected interest rate cut this month. The greenback rose strongly after Fed Chair Powell played down the chances of a sharper rate cut at the Fed’s November meeting.