Morning Bid Americas: Oil and yen drop on MidEast restraint, Japan indecision

Welltower

28/10/2024 10:14

A look at the day ahead in U.S. and global markets from Mike
Dolan    
A monster Halloween week of critical market events kicked off
with a sharp slide in both crude oil prices and Japan's yen as
tensions eased somewhat in the Middle East while Japan's
election injected a rare bout of political uncertainty there.
    The yen  JPY=  took a hit first thing on Monday, slicing
through 153 per dollar to its weakest since July, as investors
figured the loss of a parliamentary majority for Japan's ruling
coalition in weekend elections would hamper moves to lift   
interest rates further.
    A period of wrangling to secure a coalition is likely after
Japan's Liberal Democratic Party and its junior partner Komeito
won 215 lower house seats to fall short of the 233 majority.
    With the Bank of Japan meeting on Wednesday, the political
consensus behind further tightening - as well as the country's
fiscal and foreign policy settings - will remain in limbo for
several weeks. LDP Prime Minister Shigeru Ishiba on Monday vowed
to stay on, saying trying economic and geopolitical times call
for continuity.
    The weakening yen, however, lifted Japan's Nikkei stock
index  .N225  almost 2% and nudged the dollar up more broadly -
with the dollar index  .DXY  on course to end its best month in
more than two years.
    In another relief for inflation worriers, crude oil prices
also fell sharply on Monday, dropping more than 4% after
Israel's retaliatory strike on Iran over the weekend bypassed
Tehran's oil and nuclear facilities and did not disrupt energy
supplies - cooling tensions in the Middle East. 
    Many of the comments from both sides following the strike
appeared to step back somewhat from further escalation with new
moves for a truce in Gaza back on the table.
    U.S. crude prices  CLc1  skidded below $68 per barrel for
the first time in almost a month - and continued to track
year-on-year losses of almost 20%.
    Still, with some $139 billion of two and five-year Treasury
coupons up for auction later on Monday and next week's U.S.
election looming, Treasury yields  US10YT=RR   US2YT=RR  climbed
first thing to their highest in almost three months.
    After a flat Friday and with Monday's economic diary thin,
U.S. stock futures were higher ahead of the bell - but traders
were bracing for a week packed with market-moving events.
    Five of the so-called Magnificent seven of U.S. megacap
stocks report earnings during the week - starting with
Alphabet's  GOOGL.O  quarterlies on Tuesday, Microsoft  MSFT.O 
and Meta  META.O  on Wednesday and Amazon  AMZN.O  and Apple
 AAPL.O  on Thursday.
    Tesla's  TSLA.O  22% surge on its earnings last week has
whetted appetites for what may be coming down the pike.
    Alongside the BOJ decision, the health of the U.S. labor
market once again comes into view - with a stream of updates on
employment culminating in the release of the national payrolls
report on Friday.
    Thursday also brings the release of the Federal Reserve's
favored PCE inflation gauge for September - which is expected to
see the annual "core" PCE rate tick down a tenth to 2.6%.
    It is a big week for Britain too, with the ruling Labour
Party's first annual budget to be announced on Wednesday.
    Sterlng  GBP=  was steady ahead of the long-awaited event,
but 10-year UK government bond yields briefly touched their
highest in almost four months amid expectations of hefty
borrowing increases.
    Stocks in Europe and Asia were higher generally on Monday.
    Mainland China and Hong Kong stocks ended marginally up as
investors grew cautious ahead of key events next week, including
a legislative meeting in Beijing and the U.S. presidential
election.

    Key developments that should provide more direction to U.S.
markets later on Monday:  
* Dallas Federal Reserve October manufacturing survey
* US corporate earnings: Ford, ON Semiconductor, Regency
Centers, Waste Management, SBA Communications, F5, Welltower,
Cadence Design, Brown & Brown, Centerpoint Energy etc  
* European Central Bank Vice President Luis de Guindos speaks in
Madrid, Bank of Canada Governor Tiff Macklem speaks in Toronto 
* US Treasury sells $69 billion of 2-year notes and $70 billion
of 5-year notes; also sells $153 billion of 3- and 6-month bills
    
     



    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Yen plunges, Nikkei rallies amid political upheaval    https://reut.rs/3Up52rQ
US non-farm payrolls likely hit a four-month low in October    https://reut.rs/3Yx7fns
Nvidia's race to become world's most valuable company    https://reut.rs/48kdnTm
US core capital goods orders rise again    https://reut.rs/3Yf0ky2
High food, electricity prices in the U.S.    https://reut.rs/4eUsiGq
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (By Mike Dolan, mike.dolan@thomsonreuters.com, editing by Ed
Osmond)
 ((mike.dolan@thomsonreuters.com  https://reut.rs/3xFdLhlhomsonreuters.com
 mailto:mike.dolan@thomsonreuters.com; +44 207 542 8488; Reuters
Messaging: rm://mike.dolan.reuters.com@thomsonreuters.net/))