JASPER’S MARKET SQUAWK 09-10-2023
Post-NFP Rally On-Hold Following Hamas Attack
After a surprising rally on Friday instigated by an unexpectedly hot NFP, risk-on appetite took a backseat early Monday, prompted by a flock into safe havens amidst Hamas’ attack on Israel. Treasuries, Gold and Crude oil soared.
Chart: WTI
Key Factors for Today
- Post-NFP Rally Stalled as Hamas Attack Sparks Flight to Safety
- Tech Boost from Strong Hiring Short-lived Amidst Israel Conflict
- WTI Soars Over 5% on Escalating Israel-Hamas Clash
- Gold Rises 1.30% as Investors Seek Safe Haven Amidst Geopolitical Risk
- Lagarde Confident in ECB’s Plan to Achieve 2% Inflation
- Global Indices at Risk of Country Garden Coupon Payment Deadline
Hiring Beat Bolsters Tech, Rally Short-Lived
The US economy added 336k jobs in September, more than doubling economists’ expectations, with leisure and hospitality seeing the largest increase. August’s release was also revised from 187k to 227k. Although initially selling off, cooler monthly wage growth of 0.2% and overhiring triggered a rally risk on Friday, with Nasdaq closing 2% higher at 15k. Futures are seen lower early Monday amidst the latest conflict, with support at 14715.
Israel Conflict Sends WTI Soaring Over 5%
Over the weekend, the clash between Israeli and Hamas military forces reversed some crude oil losses incurred last week as the commodity spiked over 5% to $87.20 per barrel early Monday. The conflict is seen as jeopardising a proposed defence deal between Washington and Riyadh while potentially impacting Iran’s oil supply and exports. Meanwhile, oil ministers in Middle-east countries have reaffirmed their commitment to oil production. $82.75/bbl remains support under $89.40/bbl.
Gold 1.30% Higher But Still At Risk of Hikes
The rise in geopolitical risk has caused investors to seek the safety of gold, with the precious metal extending gains to $1855 an ounce early Monday. US stock futures traders appear to be quickly putting the recent NFP rally behind them despite the strong report keeping policymakers vigilant about the tightness of the labour market. With another rate hike before the end of the year possible, gold could be weighed down again, with a focus on $1830 an ounce.
Lagarde Confident About Falling Inflation to 2%
ECB’s Christine Lagarde expressed confidence in the bank’s ability to bring inflation to 2% during an October 2 interview published Sunday. She said that the short-term outlook for the Euro Area is expected to be supported by rapidly falling inflation and an improving situation over Europe’s gas reserves. EUR/USD delivered its 3rd winning streak on Friday despite failing to take over $1.06 but remains muted early Monday, bringing $1.05 back into focus.
Country Garden in Focus Again as Deadline Looms
China’s largest private developer, Country Garden, is facing another deadline of two coupon payments on Monday but could default on the 17th as its 30-day grace period for one of September’s 15M coupons ends. The developer has 10.96B offshore bonds and 42.4B yuan loans not denominated in yuan. The risk of a creditor liquidation may see gold and WTI influenced, along with global indices, including the Footsie. After a 2-day streak to 7540, the index could be at risk of further drops again, with 7410 seen as major support and 7590 as resistance.
On The Docket
- German Industrial Production
- Fed Logan Speech
- Fed Barr Speech
- Fed Jefferson Speech
FX 1-Day Relative Performance (USD)
- Aussie and Kiwi 0.53% and 0.37% down
- Euro and British Pound both 0.29% lower
- Yen pretty flat, Swissy down by 0.04%
- Canadian dollar largely unchanged too
- Gold 1% higher, Silver up by 0.91%
- Crude and Brent soar 3.55% and 3.25%
- Natural gas futures spike 3.20% higher
