Today’s News
Oil prices are on track for their largest weekly increase in over a year, driven by escalating tensions in the Middle East that have unsettled global markets ahead of the weekend.
Brent crude futures are poised to rise about 8% for the week, marking their steepest gain since February 2023, while U.S. crude futures are up 8.2%, the largest weekly increase since March last year.
Image Source: Reuters
Despite gains in most equity indexes and stock futures, market optimism was tempered by concerns that Israel might soon launch retaliatory strikes on Iran. U.S. President Joe Biden tried to calm fears, stating he does not believe there will be an “all-out war” in the Middle East, though he previously mentioned discussions about potential U.S. strikes on Iran’s oil infrastructure in response to Tehran’s missile attacks on Israel.
Even as oil prices recover from recent lows, global stocks and investor sentiment are feeling the strain. Should geopolitical tensions persist and oil prices continue rising, investors may need to revise their inflation expectations.
Oil Markets are Wary of a Middle East Escalation
Source: LSEG Datastream, Reuters, October 3,2024 by Vineet Sachdev
Federal Reserve Chair Jerome Powell is likely keeping a close eye on these developments. His recent remarks suggest the U.S. central bank will stick to gradual quarter-percentage-point rate cuts, as he remains cautious about easing too quickly and risking a resurgence in inflation.
The resilience of the U.S. economy, especially evident in the labor market and services sector, supports a slower pace of rate cuts.
Later today, September’s nonfarm payrolls report is set to take the spotlight, with recent data pointing to continued strength in employment. Investors will also focus on speeches from European Central Bank policymakers and Bank of England’s chief economist, Huw Pill.
Rising Unemployment, Rising Risk
Source: Bureau of Labor Statistics, U.S. Federal Reserve, Reuters
Elsewhere, in a positive development, U.S. East Coast and Gulf Coast ports reopened Thursday night after dockworkers and operators reached a wage agreement, ending the largest work stoppage in nearly 50 years.
Key factors to watch on Friday include the U.S. nonfarm payrolls report for September, and speeches from the Bank of England’s Huw Pill and various European Central Bank policymakers.
Other News
Asia Stocks Fall, Oil Gains Amid Tensions
Asian stocks dropped as Middle East tensions fueled a sharp weekly oil price rise. Investors await the U.S. jobs report for clues on future Fed rate moves.
U.S. Port Strike Ends, Delays Remain
U.S. East and Gulf Coast ports reopened after a wage deal ended the largest strike in decades, but clearing ship backlogs will take time.
Spirit Airlines Considers Bankruptcy Talks
Spirit Airlines is in discussions with bondholders about a potential bankruptcy filing following its failed JetBlue merger, sending shares down 30%.
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