Markets Enter Crucial Month with Caution
As the calendar flips to a new month, Asian markets are taking a cautious approach, with shares largely lower and Treasury yields hovering near three-month highs. The reason for this apprehension? The highly anticipated U.S. payrolls data, set to be released today, and the looming U.S. presidential election and Federal Reserve policy meeting next week.
Oil Prices Surge Amid Geopolitical Tensions
Meanwhile, oil prices are on the rise, with Brent prices up almost 2% to $74.13 a barrel, following reports of a potential retaliatory strike by Iran on Israel from Iraqi territory. This development has added fuel to the fire, pushing oil prices higher.
Tech Giants Shine Despite Market Jitters
In a surprising turn of events, Nasdaq futures rose 0.3% overnight, thanks to a stellar performance by tech giants. Amazon’s shares soared 5.3%, adding a whopping $104 billion to its market cap, after posting third-quarter profits above Wall Street estimates. Intel also surprised with upbeat revenue projections, sending its shares up 7% after the close.
Asian Markets Take a Hit
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.3%, with Tokyo’s Nikkei falling 2.1% due to a stronger yen, which clouded the outlook for Japanese exporters. China’s blue chips inched 0.1% higher, while Hong Kong’s Hang Seng index rose 0.4% after a private survey showed China’s factory activity returned to expansion in October.
Rate Cut Expectations Soar
Barring any major surprises in the U.S. payrolls report, a quarter-point rate cut by the Fed is almost a certainty, with economists expecting the U.S. economy to have added 113,000 jobs in October. However, some analysts, such as Goldman Sachs and TD Securities, are predicting lower job gains, citing distortions caused by hurricanes and the Boeing strike.
Currency Markets in Flux
In the foreign exchange market, the pound was pinned near 2-1/2 month lows, while British bond yields jumped as investors judged the UK government’s new budget would boost inflation and cause the Bank of England to cut interest rates more slowly. Treasury yields hovered near three-month highs, with the two-year yields rising 7 basis points this week to 4.1702%.
Gold Prices Tumble
Gold prices took a 1.5% tumble overnight, and were last steady at $2,745.69 an ounce, as investors turned their attention to the highly anticipated U.S. payrolls data and the Federal Reserve’s policy meeting next week.
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