US equity futures have weakened and oil prices have surged due to escalating tensions in the Middle East. This comes after Iran launched about 200 ballistic missiles at Israel, leading to a vow of retaliation from Prime Minister Benjamin Netanyahu and increasing the risk to crude supplies from the region. As of 8:00am ET, S&P futures were down 0.2% but off the worst levels of the session following yesterday’s flight to safety. Nike shares are set to fall after the firm withdrew its guidance and KKR is considering a takeover bid for an Asian chipmaker. Nasdaq futures were also in the red with Mag 7 names all lower ex-META.
In premarket trading, JD Sports Fashion Plc fell after reporting results; Nike Inc. fell as much as 5.7% in premarket trading after the company scrapped its full-year sales guidance citing leadership transition later this month. Nike is facing one of its roughest patches in decades, moved to reset Wall Street’s expectations ahead of new Chief Executive Officer Elliott Hill’s arrival.
Middle East escalations have taken center stage as Israel vowed significant retaliation after Iran fired up to +150 ballistic missiles at the country yesterday. This stood out from Axios: “Israeli officials staring down all-out regional war tell Axios Israel will launch a "significant retaliation" to Tuesday's massive missile attack within days that could target oil production facilities inside Iran and other strategic site.”
European stocks have pared an earlier gain to trade little changed, with the energy sector outperforming as investors assess the escalating crisis in the Middle East as well as the impact of more stimulus in China. Oil producers rise as crude prices extend gains, while real estate stocks and utilities are the biggest laggards.
Elsewhere, Chinese stocks listed in Hong Kong jumped the most in almost two years after Beijing followed other major cities in relaxing home purchase rules. HK surged 6.2% as property (+14%) and tech (+8%) power the region higher; property developers led the rally, with a gauge of the sector surging as much as 47%, while an index of brokerage shares jumped 35%, both record intraday moves. There’s growing optimism China’s recently announced stimulus blitz has brought an end to the three-year slide in Chinese shares that was driven by the stuttering economy and a multi-year property crisis.
In FX, the yen is the weakest of the G-10 currencies, falling 0.5% against the greenback after Bank of Japan Governor Ueda sent dovish signals regarding the policy outlook and after Japan’s Prime Minister Shigeru Ishiba said the environment doesn’t call for raising interest rates again. The Bloomberg Dollar Spot Index is little changed.
In rates, US yields are cheaper by 1.5bp to 4bp across the curve near session highs, 10-year by nearly 3bp on the day with bunds and gilts in the sector lagging by an additional 2.5bp and 4.5bp. Gilts lead a selloff in European government bonds, with UK 10-year yields rising 7 bps to 4.01%. US 10-year yields climb 3 bps to 3.76%.
In commodities, oil prices climbed for a second day after Israel vowed to retaliate against Iran after it fired ballistic missiles at Israel in a severe escalation of hostilities. WTI is up near 3% to around $71.85 a barrel. Spot gold drops ~$9, paring some of Tuesday’s safe-haven led rally.
Looking at today's calendar, US economic data includes September ADP employment change at 8:15am. Fed speakers scheduled include Hammack (9am), Musalem (10:05am), Bowman (11am) and Barkin (12:15pm)
Market Snapshot
S&P 500 futures little changed at 5,755.75
STOXX Europe 600 up 0.4% to 522.86
MXAP up 0.4% to 196.53
MXAPJ up 1.4% to 629.24
Nikkei down 2.2% to 37,808.76
Topix down 1.4% to 2,651.96
Hang Seng Index up 6.2% to 22,443.73
Shanghai Composite up 8.1% to 3,336.50
Sensex little changed at 84,266.29
Australia S&P/ASX 200 down 0.1% to 8,198.19
Kospi down 1.2% to 2,561.69
German 10Y yield little changed at 2.09%
Euro little changed at $1.1079
Brent Futures up 1.9% to $74.94/bbl
Gold spot down 0.4% to $2,652.69
US Dollar Index little changed at 101.18
Top Overnight News
BOJ’s Ueda sends somewhat dovish signals in highlighting the uncertain outlook for the US economy and unstable financial markets. BBG
Chinese shares listed in Hong Kong jumped the most in almost two years on the Hang Seng’s first day open after a holiday. Stan Druckenmiller still said he’s staying away from China “as long as Xi Jinping is running” the country. BBG
ECB’s Kazaks says the central bank will likely cut in Oct, but cautions markets against becoming too ambitious with easing expectations. BBG
As Israel weighs how to respond to Tehran’s latest missile barrage, it could take a page from its previous playbook when, after days of deliberation, its military targeted a single Iranian military site. WSJ
Israel has destroyed about 50% of the missiles and rockets that Hezbollah accumulated over the last ~30 years, dealing a significant blow to the terror group. NYT
The Saudi oil minister has said that prices could drop to as low as $50 per barrel if so-called cheaters within OPEC+ don’t stick to agreed-upon production limits, according to delegates in the cartel. WSJ
Russian forces are steadily capturing territory inside Ukraine “with speed and aggression not seen since the full invasion in 2022”. WSJ
Barclays aims to bolster returns in its investment bank by focusing on advisory and equity capital markets while deemphasizing debt underwriting. FT
VP nominees Tim Walz and JD Vance focused on policy and defending their running mates at the top of the ticket in a mild-toned debate. Vance, who succeeding in softening his typically aggressive delivery, won according to a CBS poll. BBG
A more detailed look at global markets courtesy of Newsquawk
APAC stocks traded mixed with some cautiousness seen amid heightened tensions in the Middle East after Iran conducted a missile attack on Israel. ASX 200 was rangebound as gains in the commodity-related industries offset the losses in the tech and consumer sectors. Nikkei 225 slumped at the open and retreated beneath the 38,000 level after the prior day's currency strength. Hang Seng resumed its China stimulus-spurred rally on return from the holiday with notable strength in tech and property.
Top Asian News
Japan's new Economy Minister Akazawa said a complete exit from deflation is the top priority and he wants the BoJ to share their view that an exit from deflation is the top priority, while he commented that the BoJ should be careful about raising rates as it takes time to fully exit deflation. Akazawa also stated that it is not necessarily correct that PM Ishiba is positive about further rate hikes and that Ishiba's comment on the need for monetary policy normalisation has various conditions attached.
BoJ Governor Ueda says "Japan's economy is recovering moderately albeit with some weak signs"; "trend inflation, likely below 2%, is likely to accelerate"; says markets remain unstable. "Uncertainty surrounding Japan's economy prices remain high", "We must be vigilant to impact of markets, FX moves, an their effect on Japan's economy", "We must scrutin
US equity futures have weakened and oil prices have surged due to escalating tensions in the Middle East. This comes after Iran launched about 200 ballistic missiles at Israel, leading to a vow of retaliation from Prime Minister Benjamin Netanyahu and increasing the risk to crude supplies from the region. As of 8:00am ET, S&P futures were down 0.2% but off the worst levels of the session following yesterday’s flight to safety. Nike shares are set to fall after the firm withdrew its guidance and KKR is considering a takeover bid for an Asian chipmaker. Nasdaq futures were also in the red with Mag 7 names all lower ex-META.
In premarket trading, JD Sports Fashion Plc fell after reporting results; Nike Inc. fell as much as 5.7% in premarket trading after the company scrapped its full-year sales guidance citing leadership transition later this month. Nike is facing one of its roughest patches in decades, moved to reset Wall Street’s expectations ahead of new Chief Executive Officer Elliott Hill’s arrival.
Middle East escalations have taken center stage as Israel vowed significant retaliation after Iran fired up to +150 ballistic missiles at the country yesterday. This stood out from Axios: “Israeli officials staring down all-out regional war tell Axios Israel will launch a "significant retaliation" to Tuesday's massive missile attack within days that could target oil production facilities inside Iran and other strategic site.”
European stocks have pared an earlier gain to trade little changed, with the energy sector outperforming as investors assess the escalating crisis in the Middle East as well as the impact of more stimulus in China. Oil producers rise as crude prices extend gains, while real estate stocks and utilities are the biggest laggards.
Elsewhere, Chinese stocks listed in Hong Kong jumped the most in almost two years after Beijing followed other major cities in relaxing home purchase rules. HK surged 6.2% as property (+14%) and tech (+8%) power the region higher; property developers led the rally, with a gauge of the sector surging as much as 47%, while an index of brokerage shares jumped 35%, both record intraday moves. There’s growing optimism China’s recently announced stimulus blitz has brought an end to the three-year slide in Chinese shares that was driven by the stuttering economy and a multi-year property crisis.
In FX, the yen is the weakest of the G-10 currencies, falling 0.5% against the greenback after Bank of Japan Governor Ueda sent dovish signals regarding the policy outlook and after Japan’s Prime Minister Shigeru Ishiba said the environment doesn’t call for raising interest rates again. The Bloomberg Dollar Spot Index is little changed.
In rates, US yields are cheaper by 1.5bp to 4bp across the curve near session highs, 10-year by nearly 3bp on the day with bunds and gilts in the sector lagging by an additional 2.5bp and 4.5bp. Gilts lead a selloff in European government bonds, with UK 10-year yields rising 7 bps to 4.01%. US 10-year yields climb 3 bps to 3.76%.
In commodities, oil prices climbed for a second day after Israel vowed to retaliate against Iran after it fired ballistic missiles at Israel in a severe escalation of hostilities. WTI is up near 3% to around $71.85 a barrel. Spot gold drops ~$9, paring some of Tuesday’s safe-haven led rally.
Looking at today's calendar, US economic data includes September ADP employment change at 8:15am. Fed speakers scheduled include Hammack (9am), Musalem (10:05am), Bowman (11am) and Barkin (12:15pm)
Market Snapshot
S&P 500 futures little changed at 5,755.75
STOXX Europe 600 up 0.4% to 522.86
MXAP up 0.4% to 196.53
MXAPJ up 1.4% to 629.24
Nikkei down 2.2% to 37,808.76
Topix down 1.4% to 2,651.96
Hang Seng Index up 6.2% to 22,443.73
Shanghai Composite up 8.1% to 3,336.50
Sensex little changed at 84,266.29
Australia S&P/ASX 200 down 0.1% to 8,198.19
Kospi down 1.2% to 2,561.69
German 10Y yield little changed at 2.09%
Euro little changed at $1.1079
Brent Futures up 1.9% to $74.94/bbl
Gold spot down 0.4% to $2,652.69
US Dollar Index little changed at 101.18
Top Overnight News
BOJ’s Ueda sends somewhat dovish signals in highlighting the uncertain outlook for the US economy and unstable financial markets. BBG
Chinese shares listed in Hong Kong jumped the most in almost two years on the Hang Seng’s first day open after a holiday. Stan Druckenmiller still said he’s staying away from China “as long as Xi Jinping is running” the country. BBG
ECB’s Kazaks says the central bank will likely cut in Oct, but cautions markets against becoming too ambitious with easing expectations. BBG
As Israel weighs how to respond to Tehran’s latest missile barrage, it could take a page from its previous playbook when, after days of deliberation, its military targeted a single Iranian military site. WSJ
Israel has destroyed about 50% of the missiles and rockets that Hezbollah accumulated over the last ~30 years, dealing a significant blow to the terror group. NYT
The Saudi oil minister has said that prices could drop to as low as $50 per barrel if so-called cheaters within OPEC+ don’t stick to agreed-upon production limits, according to delegates in the cartel. WSJ
Russian forces are steadily capturing territory inside Ukraine “with speed and aggression not seen since the full invasion in 2022”. WSJ
Barclays aims to bolster returns in its investment bank by focusing on advisory and equity capital markets while deemphasizing debt underwriting. FT
VP nominees Tim Walz and JD Vance focused on policy and defending their running mates at the top of the ticket in a mild-toned debate. Vance, who succeeding in softening his typically aggressive delivery, won according to a CBS poll. BBG
A more detailed look at global markets courtesy of Newsquawk
APAC stocks traded mixed with some cautiousness seen amid heightened tensions in the Middle East after Iran conducted a missile attack on Israel. ASX 200 was rangebound as gains in the commodity-related industries offset the losses in the tech and consumer sectors. Nikkei 225 slumped at the open and retreated beneath the 38,000 level after the prior day's currency strength. Hang Seng resumed its China stimulus-spurred rally on return from the holiday with notable strength in tech and property.
Top Asian News
Japan's new Economy Minister Akazawa said a complete exit from deflation is the top priority and he wants the BoJ to share their view that an exit from deflation is the top priority, while he commented that the BoJ should be careful about raising rates as it takes time to fully exit deflation. Akazawa also stated that it is not necessarily correct that PM Ishiba is positive about further rate hikes and that Ishiba's comment on the need for monetary policy normalisation has various conditions attached.
BoJ Governor Ueda says "Japan's economy is recovering moderately albeit with some weak signs"; "trend inflation, likely below 2%, is likely to accelerate"; says markets remain unstable. "Uncertainty surrounding Japan's economy prices remain high", "We must be vigilant to impact of markets, FX moves, an their effect on Japan's economy", "We must scrutin
