Markets whipsawed on Friday after the strong jobs report pushed bond yields to their highest level of the year. However, the overdue relief bounced indexes sharply off the morning lows as a strong short squeeze took hold. Unfortunately, a new conflict erupted this weekend after a surprise Hamas attack on Israel prompted a declaration of war spiking oil prices and adding another geopolitical worry to the world. With a PPI, FOMC Minutes, CPI, and the beginning of 4th quarter earnings on Friday traders will have to be prepared for just about anything. Keep in mind that more than 90% of companies within their blackout period volume could be anemic with bursts of wild data-driven volatility.
Asian markets closed their Monday session mixed after Hong Kong canceled the morning session and Shanghai resumed trading after their Golden Week. European markets trade mixed but mostly lower in a choppy morning session as they monitor the new Middle East war. U.S. futures point to a lower open with rising bond yields, higher oil prices, and more geopolitical concerns worrying investors.
Economic Calendar
Earnings Calendar
There are no noteworthy earnings reports for Monday.
News & Technicals’
The recent attacks in Israel have caused several airlines to cancel their flights to and from the country. American, Delta, and United, which are the three major U.S. airlines, announced that they have suspended their flights to Israel this weekend, citing security concerns. British Airways and Lufthansa, which are the largest airlines in the UK and Germany, respectively, also followed suit and canceled their service. The flight cancellations come amid the escalating violence between Israel and Hamas, the militant group that controls Gaza. The conflict has resulted in hundreds of deaths and injuries, as well as widespread damage to buildings and infrastructure. The airlines said that they will monitor the situation and resume their flights when it is safe to do so.
The ongoing conflict between Israel and Hamas has raised concerns about the stability of oil markets in the Middle East. Oil prices surged on Monday as the violence escalated for the third consecutive day, with Hamas launching rockets at Israel and Israel responding with airstrikes on Gaza. However, analysts say that the impact of the conflict on oil supply and transport is likely to be limited unless it spreads to other countries in the region or disrupts major oil facilities. According to Vivek Dhar, Commonwealth Bank’s director of mining and energy commodities research, “For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport”.
Thousands of workers with Mack Trucks, a subsidiary of Volvo Group, are set to go on strike Monday after rejecting a proposed contract from the company. The United Auto Workers (UAW) union, which represents about 3,900 Mack Trucks employees, announced that 73% of its members voted against the tentative deal that was reached last week. The union said that the deal did not meet its expectations on issues such as wages, health care, job security, and retirement benefits. The union is also negotiating with the Detroit automakers, and some workers said they were influenced by the higher standards set by those talks. The strike will affect Mack Trucks plants in Pennsylvania, Maryland, and Florida.
Equity markets whipsawed on Friday after a strong jobs report boosted the yields to the highest level of the year, but stocks reversed finally beginning a relief rally with a substantial short squeeze. However, the data increased the chances of another rate hike this year and unfortunately, the bond yields are higher this morning. Sadly a new war erupted this weekend when Hamas launched a surprise attack on Israel spiking oil prices and adding more geopolitical uncertainties setting the stage for a lower open this morning. Now with more than 90% of companies within their blackout period volume could be anemic as we wait for PPI, FOMC minutes, CPI, and the kickoff to the 4th quarter earnings season with big bank reports on Friday. Challenging and volatile may prove to be an understatement with all the uncertainty clouding the path forward.
Trade Wisely,
Doug
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