WTI and Brent crude futures fell over 5% on Monday, and US natural gas prices experienced a decline of more than 10%. This significant drop occurred as concerns about supply disruptions eased, following Israel's retaliatory strikes on Iran over the weekend, which did not affect oil and nuclear facilities. The market had anticipated a response from Israel after Iran’s offensive earlier this month, which had heightened tensions in the Middle East since Iran-backed Hamas attacked Israel last year.
The FTSE/JSE All Share Index (ALSI) closed at a record high on Monday, buoyed by stronger global markets. Investors are focusing on a major US inflation report and key tech earnings from major companies this week. Relief that Israel’s strikes were confined to military targets eased concerns of potential disruptions in global energy supplies, which had previously weighed on sentiment, according to Bloomberg. Investors also anticipate earnings from Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Meta (NASDAQ:META), which could further lift markets. The ALSI rose by 0.72%, and the rand strengthened to R17.69 per dollar at 18h00.
Hong Kong’s Hang Seng Index ended nearly flat at 20 599 on Monday, with property and tech gains balancing out losses in financials. Traders are cautiously awaiting China’s Manufacturing PMI for October and preparing for key events next week, including the US presidential election and a legislative meeting in China. Chinese industrial profits fell sharply by 27.10% year-over-year in September, the largest decline since March 2020, due to continued low factory gate prices, rising costs, and a high comparison base from last year. Meanwhile, Japan’s Nikkei rose 1.82%, recovering from last week’s losses, as the yen weakened following Japan’s weekend election. Political uncertainties have increased after the Liberal Democratic Party and its coalition partner Komeito lost their lower house majority, which could affect the Bank of Japan's policy direction. The BOJ is expected to keep monetary policy unchanged at its Thursday meeting.
US stocks climbed on Monday as the S&P 500 rose 0.50%, the Dow Jones gained 280 points, and the Nasdaq added 0.60%, with relief following Israeli airstrikes on Iran that avoided oil or nuclear sites. Investors are also gearing up for a busy week of corporate earnings from five of the “Magnificent Seven” tech giants.
European markets rose on Monday as well, with the STOXX 50 and STOXX 600 up by 0.70% and 0.50%, respectively. Investors kept a close watch on Middle East developments at the start of a packed week of economic data, as the US presidential election on 5 November draws closer. Media and construction stocks increased by 1.60% and 2%, respectively, while oil and gas stocks dropped by 1.40% after oil prices fell.
