Asian stock markets began the week in uncertain waters with investors weighing up a mixed bag of cues, from the Hamas attack on Israel, to unconvincing holiday week data out of China and the likelihood of pumped up interest rates for some time to come.
US stock futures slid as the military conflict in the Middle East lifted oil and Treasuries, while the hotter-than-expected September US jobs report raised the rate stakes for inflation figures later in the week.
Holidays in Japan and South Korea made for thin conditions but the initial bid was for bonds and the safe harbours of Japanese yen and gold, while oil prices climbed by more than $3 a barrel.
China stocks fell as trading resumed following the week-long Golden Holiday as mixed tourism data failed to convince investors of a strong economic recovery, while overseas uncertainties also curbed sentiment.
Chinese holidaymakers’ spending surged during this year’s eight-day Golden Week holiday, beating pre-pandemic levels but still fell short of government estimates.
The blue-chip CSI 300 Index lost 0.13% and the Shanghai Composite Index declined 0.44%, or 13.55 points, to 3,096.92. The Shenzhen Composite Index on China’s second exchange edged down 0.09%, or 1.64 points, to 1,908.64.
Meanwhile, the Hong Kong stock exchange delayed trading in both the securities and derivatives markets due to Typhoon Koinu. The Hang Seng Index went on to gain 0.18%, or 31.42 points, and close at 17,517.40.
Indian stocks retreated with Mumbai’s signature Nifty 50 index down 0.69%, or 136.40 points, at 19,517.10. MSCI’s broadest index of Asia-Pacific shares outside Japan was flat.
Israel pounded the Palestinian enclave of Gaza on Sunday, killing hundreds of people in retaliation for one of the bloodiest attacks in its history when Islamist group Hamas killed at least 700 Israelis and abducted dozens more.
The danger of disruptions to supply was enough to drive Brent up $3.14 to $87.72 a barrel, while US crude climbed $3.28 to $86.07 per barrel. Gold was also in demand, rising 1.1% to $1,852 an ounce.
Muscular US Jobs Report
In currency markets, the yen was the main gainer though moves were modest overall. The euro eased 0.3% to 157.37 yen, while the dollar dipped 0.1% to 149.14 yen. The euro also eased 0.3% on the dollar to $1.0552.
The cautious mood was a balm for sovereign bonds after recent heavy selling and 10-year Treasury futures rose a sizeable 12 ticks. Yields were indicated around 4.74%, compared to 4.81% on Friday.
Any sustained rally in oil prices would act as a tax on consumers and add to inflationary pressures, which weighed on equities as S&P 500 futures shed 0.8% and Nasdaq futures lost 0.7%. Eurostoxx 50 futures slipped 0.4% and FTSE futures 0.1%.
The strength of the US jobs report had fed expectations that interest rates would have to stay high for longer, with another major test looming from data on September consumer prices.
Minutes of the last Federal Reserve meeting are due this week and should help gauge how serious members were about keeping rates up, or even hiking again.
The news from the Middle East could sour the start of corporate earnings season with 12 S&P 500 companies reporting this week including JP Morgan, Citi and Wells Fargo.
Tokyo – Nikkei 225 <> CLOSED
Hong Kong – Hang Seng Index > UP 0.18% at 17,517.40 (close)
Shanghai – Composite < DOWN 0.44% at 3,096.92 (close)
London – FTSE 100 > UP 0.22% at 7,510.89 (0933 BST)
New York – Dow > UP 0.87% at 33,407.58 (Friday close)
- Reuters with additional editing by Sean O’Meara