Asian stocks slipped to start the week after safe-haven assets made solid gains on Friday. On Monday, gold pared some of the gains from Friday while oil was stable above 90 US dollars a barrel.
In the Middle East conflict, Iran warned Israel over the weekend that regional powers were willing to get involved if it Israel did not end its military campaign in Gaza. The US is also sending a second aircraft carrier to the region in case of an escalation of the war there. Following calls for civilians to evacuate some parts of the Gaza Strip, a ground invasion by Israeli forces is expected soon. Both a ground invasion and particularly a broadening of the conflict beyond Israel and Gaza would have a huge impact on markets.
In the Asia-Pacific region, stock markets were off to a weak start on Monday. In Tokyo, the Nikkei 225 dropped almost 2% and in South Korea, the Kospi was trading down 1%. In Australia, the S&P/ASX 200 lost 0.4%. Hong Kong's Hang Seng Index was down 0.6%, while the Shanghai Composite was trading 0.4% weaker after China left its key lending rates unchanged on Monday. A series of economic data will drive Asian markets this week including Chinese third-quarter gross domestic product on Wednesday, a South Korean central bank rate decision on Thursday and Japan’s September inflation data on Friday.
In New York, stocks started Friday’s session strong, but were mostly in the red by the close. The Dow Jones Industrial managed to pull off a 0.1% gain. But the S&P 500 lost 0.5% and the tech-heavy Nasdaq-100 took the biggest losses, closing Friday’s session 1.2% lower.
Third-quarter earnings season kicked off with figures from J.P. Morgan out of the US. The bank raised its net interest income outlook for the year and net income came in above analyst expectations. J.P. Morgan shares ended Friday’s session up 1.5%.
Prices for good imported into the US increased at a much slower pace in September than in the previous month. The Import Price Index was up 0.1% when compared to the previous month. The prices of many good fell in September, but those lower prices were more than offset by higher fuel costs. Import prices contribute to overall prices in an economy and affect the inflation rate. Slowing import prices could help to decelerate the speed of price increases in the US, where consumer prices grew by 4.1% on the year in September, more than twice the Federal Reserve’s target rate of 2%.
Higher prices were the main reason behind a slip in US consumer confidence in September. The University of Michigan Consumer Confidence Index fell to 63 from 68.1 in the previous month.
In Switzerland, inflation was becoming less of a concern with the Producer and Import Price Index falling in September by 0.1% when compared with August. When compared September of last year, the whole range of domestic and imported products has come down 1%. The annual inflation rate has been below the Swiss National Bank’s (SNB) target of 2% for multiple months in a row. As a result of the decelerating rate of inflation, the SNB kept rates unchanged in September.
Corporate news in focus: There is no major corporate news scheduled today.
Economic data in focus: Euro area trade balance (11:00 CET), Empire State Manufacturing Report (14:30).
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.