Stocks break higher, but for longer too?

Oct 17 – Asian markets are set to open higher on Tuesday as investors look through developments in the Middle East and rising geopolitical tensions, and take heart from an otherwise more benign US economic and corporate backdrop.

Wall Street’s performance on Monday – the three main indexes rose between 0.9% and 1.2% – will probably set the tone for Asia, where there are no major market-moving economic indicators scheduled for release.

That will change on Wednesday with a raft of Chinese data, including third-quarter GDP. Perhaps the most important event in Asia on Tuesday will be the release of the minutes of the Reserve Bank of Australia’s policy meeting this month.

The Aussie dollar is languishing near a one-year low against the US dollar, but snapped a three-day losing streak and rose 0.8% on Monday.

The greenback’s broad decline on Monday should also help lift risk appetite across Asia on Tuesday, and Wall Street’s rally will give investors food for thought too.

There are signs the positive correlation between US stocks and bonds might be weakening, but some context is required – it has been positive since early August, and only a couple of weeks ago was as strong as it has ever been.

A simple rolling 30-day correlation between the S&P 500 and the ICE BofA US Treasury bond index dipped to 0.88 on Monday, still an extremely high level but the lowest this month and down from 0.94 last week.

Monday’s equity rally and bond selloff suggest the correlation will weaken further. Could stocks – and global risk appetite, by extension – be gaining momentum of their own regardless of what the bond market does?

It’s a bold call. Or perhaps not, if you buy this scenario: the Fed is done raising rates, economic data points to a ‘soft landing’, the worst of the earnings slowdown is behind us and the 2024 outlook is indicating double-digit earnings growth.

Or does Wall Street’s resilience conduct investment flows into the US between now and the end of the year, and away from other regions like Asia and emerging markets?

The situation in the Middle East, meanwhile, doesn’t appear to be weighing too heavily on global risk appetite – implied stock market volatility, gold, the dollar, Treasuries and oil all fell on Monday.

Wall Street’s main indexes and the benchmark MSCI indexes for world, Asian, and emerging stocks are all higher since the Oct. 7 Hamas attack on Israel.

That said, investors in Asia should keep a close eye on the dollar, which is still trading up near 150.00 yen and over 7.30 yuan.

Here are key developments that could provide more direction to markets on Tuesday:

– Australia central bank October meeting minutes

– Fed’s Williams, Bowman, and Barkin all speak

– Russian President Putin visits Chinese President Xi in Beijing

(By Jamie McGeever; Editing by Josie Kao)

Wall Street ends up on earnings optimism; eyes remain on Middle East

NEW YORK, Oct 16 – Major US stock indexes ended sharply higher on Monday as investors were optimistic about the start of earnings season, while transportation and small-cap shares also jumped.

Market participants were monitoring the Israeli war in Gaza, but appeared to be taking more of a risk-on stance on Monday, with safe-haven gold prices down.

Israeli forces continued their bombardment of Gaza, which has killed thousands, including many women and children, after efforts to arrange a cease-fire stalled.

The Cboe Volatility index was lower, while the Dow registered its biggest daily percentage gain in about a month. Also, the economically sensitive Dow Jones transportation average jumped 1.9% in its biggest one-day percentage increase since late July, and the Russell 2000 small-cap index rose 1.6%.

Consumer discretionary led gains among S&P 500 sectors, although all of the sectors were higher on the day.

Charles Schwab shares jumped 4.7% as the brokerage posted a smaller-than-expected drop in quarterly profit.

Quarterly results from large banks Goldman Sachs, Bank of America, Morgan Stanley, pharmaceutical giant Johnson & Johnson, electric vehicle maker Tesla, and video-streaming pioneer Netflix are due this week.

Third-quarter earnings for S&P 500 companies are estimated to have increased 2.2% year-over-year, up from an estimated increase of 1.3% a week earlier, according to LSEG data Friday.

“At least for today, this is a market that sees a stronger earnings season, a stronger week in terms of earnings,” said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.

At the same time, global leaders are trying to make sure that the Middle East conflict “remains contained,” she said.

The Dow Jones Industrial Average rose 314.25 points, or 0.93%, to 33,984.54, the S&P 500 gained 45.85 points, or 1.06%, to 4,373.63 and the Nasdaq Composite added 160.75 points, or 1.2%, to 13,567.98.

Data earlier showed that the New York Fed’s General Business Conditions index, otherwise known as “the Empire State index,” has gone back into negative territory.

Philadelphia Fed President Patrick Harker reiterated his view from Friday that the US central bank was likely done with its rate-hike cycle.

Lululemon Athletica shares rose to their highest level in almost two years as the Canadian sportswear apparel maker was set to join the S&P 500 index this week, replacing Activision Blizzard. Lululemon shares ended up 10.3%.

Volume on US exchanges was 9.60 billion shares, compared with the 10.38 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 2.59-to-1 ratio; on Nasdaq, a 1.91-to-1 ratio favored advancers.

The S&P 500 posted 11 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 33 new highs and 206 new lows.

(Additional reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Arun Koyyur, Vinay Dwivedi, and Aurora Ellis)

US yields rise amid increased Treasury supply, still-imminent Gaza attack

NEW YORK, Oct 16 – Treasury yields edged higher on Monday as investors grapple with how bonds should be priced in a changing market dynamic that includes increased US government debt issuance with an Israeli ground offensive in Gaza still imminent.

As investors keep an eye on the Middle East, they are trying to better gauge Federal Reserve efforts to curb high inflation with what should be the term premium for interest rates – what investors expect to be compensated for lending longer-term.

A significant increase in government and deficit spending that needs to be financed is part of a new environment that will not change in the foreseeable future, said Kevin Flanagan, head of fixed income strategy at WisdomTree in New York.

“Government spending is entrenched and baseline trillion-dollar deficits are now the norm for the next few years. So what got us here isn’t going to reverse I don’t think any time soon,” he said.

“When you put a lot of this together, it helps explain why Treasury yields almost all across the curve are at or could be soon approaching 5%.”

The yield on 10-year Treasury notes rose 7.7 basis points to 4.706%, while the two-year’s yield, which reflects interest rate expectations, was up 3.8 basis points at 5.092%.

The difference between yields on two- and 10-year Treasuries, seen as a recession harbinger when shorter-term notes yield more than those with longer-dated maturities in what is known as an inverted yield curve, was at -38.8 basis points.

Diplomatic efforts to arrange a ceasefire to let aid reach the besieged Gaza Strip failed on Monday, and Israel ordered the evacuation of villages in a strip of territory near its border with Lebanon, raising fears the war could spread to a new front.

Increased Treasury supply, the acknowledgment that the Fed will keep rates higher for longer and the fact the stock market is performing well are pushing yields higher, said Will Compernolle, macro strategist at FHN Financial in New York.

“Those risky assets are staying pretty steady even in the face of higher returns on bonds,” he said. “The idea of a 5% yield sounds really good but no one wants to add duration to their balance sheet even if a bank has cash to buy more bonds.”

The Treasury sold USD 75 billion in 13-week bills at a high rate of 5.34% and USD 68 billion in 26-week bills at a high rate of 5.335%. Another USD 75 billion in 42-day bills is scheduled to be sold on Tuesday.

The Treasury is slated to auction USD 13 billion in 20-year bonds on Wednesday and USD 22 billion in five-year Treasury Inflation-Protected Securities, or TIPS, on Thursday.

The yield on the 30-year Treasury bond rose 8.3 basis points at 4.862%.

The breakeven rate on five-year US TIPS was last at 2.309%.

The 10-year TIPS breakeven rate was last at 2.372%, indicating the market sees inflation averaging about 2.4% a year for the next decade.

Oct. 16 Monday 2:37 p.m. New York / 1837 GMT

	Price	Current Yield %	Net Change (bps)
Three-month bills	5.3375	5.4965	-0.001
Six-month bills	5.3325	5.5673	0.001
Two-year note	99-212/256	5.0921	0.038
Three-year note	99-86/256	4.8659	0.049
Five-year note	99-160/256	4.7102	0.066
Seven-year note	99-92/256	4.7338	0.074
10-year note	93-132/256	4.706	0.077
20-year bond	91-88/256	5.0718	0.088
30-year bond	88-116/256	4.862	0.083

(Reporting by Herbert Lash; Editing by Will Dunham)

Gold slips, but holds above USD 1,900 pivot on Israel-Hamas conflict

Oct 16 – Gold prices fell on Monday after solid gains in the previous session, but the safe-haven metal held firm above the key USD 1,900 per ounce level as escalating conflict in the Middle East kept investors on edge.

Spot gold was down 0.7% at USD 1,918.20 per ounce by 2:13 p.m. ET (1813 GMT), after hitting its highest since Sept. 20 in the previous session. US gold futures settled 0.4% lower at USD 1,934.3.

“We’re just seeing some healthy consolidation from the recent gains… just some normal profit taking by the short-term futures traders,” said Jim Wyckoff, senior analyst at Kitco Metals.

“We’ve got a serious geopolitical situation playing out in the Middle East, I think gold prices are going to track sideways to higher here in the next few weeks with USD 2,000 not out of the equation.”

Gold, used as a safe investment during times of political and financial uncertainty, has risen more than USD 100 since falling to a seven-month low on Oct. 6, owing to safe-haven inflows as the Israel-Hamas conflict enters its 10th day.

US officials warned that the war between Israel and militant group Hamas could escalate, as US warships headed to the area amid growing clashes on Israel’s northern border with Lebanon.

While investors wait for further updates on the Israel-Hamas war, Federal Reserve Chair Jerome Powell’s speech later this week will also be closely watched for more clarity on US interest rate path.

Markets are pricing in around a 90% chance that the Fed will leave interest rates unchanged at their policy meeting next month, according to the CME FedWatch tool.

Elsewhere, spot silver was down 0.4% to USD 22.6 per ounce.

“Silver investment demand is lackluster but could attract investor attention due to geopolitical tension. We see physical demand in China and India strengthening our bullish conviction,” ANZ analysts wrote in a note.

Platinum was up about 1.2% to USD 891.53 and palladium was unchanged at USD 1,147.62.

(Reporting by Harshit Verma in Bengaluru; Editing by Tomasz Janowski and Shailesh Kuber)

UBS pushes out S&P 500 mid-2024 target forecast to year-end

Oct 16 – UBS said it now expects the S&P 500 to hit 4,700 points only by December 2024, instead of the middle of the year as it forecast earlier, due to expectations of higher-for-longer US interest rates.

The brokerage, in a note dated Oct. 13, said it now expects the benchmark index to hit 4,500 points by mid-2024, which implies an increase of about 4% from current levels.

“The delay … is primarily related to the recent rapid move higher in interest rates and … expectations that interest rates will remain higher for longer,” said David Lefkowitz, head of chief investment office, US equities, UBS.

The Federal Reserve has raised the benchmark interest rate by 525 basis points since it started its aggressive battle against inflation in March last year.

The fear of higher-for-longer rates has pushed the S&P 500 down about 6% from this year’s highs hit late in July. Still, the index has clocked a 12% gain so far this year to close at 4,327.78 points on Friday.

“We still expect a soft-ish landing in the US economy, which should drive a recovery in earnings growth and close to a double-digit total return in US large-cap stocks over the coming year,” said Lefkowitz.

“While valuations are high relative to history, they are reasonable in the context of low unemployment and falling inflation.”

(Reporting by Reshma Rockie George and Susan Mathew in Bengaluru; Editing by Savio D’Souza)

Asian FX reserves slip as central banks grapple with strong dollar

SINGAPORE/MUMBAI, Oct 16 – Asia’s central banks have spent this year defending their currencies against a strong US dollar, paring foreign exchange reserves to multi-month lows in the process, yet have struggled to soothe market nerves or contain capital outflows.

Emerging Asia’s currencies have been highly volatile all year, hemmed between China’s defence of its yuan and a surging dollar backed by a progressively more hawkish Federal Reserve.

Analysts at J.P. Morgan estimated Asian central banks, excluding China, have sold more than USD 30 billion of reserves in the past two months to stabilise currencies.

But that intervention has done little to calm investors worried about diminishing returns in emerging markets as dollar yields rise and currencies weaken.

Official data showed a net outflow of $2.7 billion from Asian local currency bonds in August as bond markets in Malaysia, Indonesia, South Korea, India and Thailand clocked their biggest net sales since October 2022.

Foreign exchange reserves have dwindled across the region. South Korea’s reserves stood at USD 414.12 billion at September-end – the smallest amount since October 2022, while Indonesia’s reserves fell to USD 134.9 billion last month, the lowest since November.

Not all of the change can be attributed to intervention, though, as the dollar’s rise has also eroded the value of other currencies held by central banks.

“Literally everybody in Asia is now participating in the market much more,” said Brad Bechtel, global head of foreign exchange at Jefferies. “The dollar would be far higher if all these Asian central banks weren’t participating so aggressively.”

Indonesia’s rupiah was, until early this month, one of few Asian currencies to be up against the dollar but is now down about 1% for the year. The South Korean won is down more than 5%, while the Thai baht has slipped nearly 5%.

The Reserve Bank of India (RBI), Bank Indonesia and Bank of Thailand have spoken out against speculative foreign exchange trades, and over the last month stepped into the market to support their depreciating currencies.

India’s foreign exchange reserves stood at USD 584.74 billion as of Oct. 6, the lowest in more than five months.

Speaking on the sidelines of the International Monetary Fund and World Bank annual meeting in Marrakech, RBI Governor Shaktikanta Das last week said, “central banks in emerging markets were required to intervene in the currency market from time to time to prevent excessive volatility”.

While reserves have fallen, they are above levels seen in October last year and still leave central banks with ample ammunition.

But gyrating currencies and the challenge of fighting an unstoppable and forceful dollar rally have also hamstrung any hope of monetary policy easing in most of Asia this year.

Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management, said it was not a surprise that rate cuts in Asia are off the radar this year and seem to be getting pushed into 2024.

“The reality is FX intervention will tighten liquidity… That completely works against what you are trying to accomplish via a rate cut. So why even bother?”

(Reporting by Ankur Banerjee in Singapore and Jaspreet Kalra in Mumbai; Editing by Vidya Ranganathan and Christopher Cushing)

Oil prices ease as investors assess risks of Israel-Hamas war

TOKYO, Oct 16 – Oil prices slipped on Monday after surging last week, with investors waiting to see if the Israel-Hamas conflict draws in other countries – a development that would potentially drive up prices further and deal a fresh blow to the global economy.

Brent futures LCOc1 were last down 33 cents, or 0.4%, at $90.56 per barrel at 0645 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 fell 0.3% or 26 cents to USD 87.43 a barrel.

Both benchmarks climbed nearly 6% on Friday, posting their highest daily percentage gains since April, as investors priced in the possibility of a wider Middle East conflict.

For the week, Brent advanced 7.5% while WTI climbed 5.9%.

“Investors are trying to figure out the impact of the conflict while a large-scale ground assault has not begun after the 24-hour deadline that Israel first notified residents of the northern half of Gaza to flee to the south,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

“The impact that may involve oil-producing countries has been factored into the prices to some extent, but if an actual ground invasion were to occur and have an impact on oil supply, the prices could easily exceed USD 100 a barrel,” he said.

The conflict in the Middle East has had little impact on global oil and gas supplies, and Israel is not a big producer.

But the war between Islamist group Hamas and Israel poses one of the most significant geopolitical risks to oil markets since Russia’s invasion of Ukraine last year, amid concerns about any potential escalation involving Iran.

Market participants are assessing what a wider conflict might imply for supplies from countries in the world’s top oil producing region, including Saudi Arabia, Iran and the United Arab Emirates.

If Tehran is found to be directly involved in the Hamas attack, it would likely result in the U.S. fully enforcing its sanctions on Iran’s oil exports, Commonwealth Bank of Australia analyst Vivek Dhar said in a note on Monday.

“The US has turned a blind eye on its sanctions on Iran’s oil exports this year as it looked to improve diplomatic ties with Iran,” he said.

“The 0.5-1 million barrels per day increase in Iran’s oil exports this year – equivalent to 0.5-1% of global oil supply – is at risk of being sidelined if U.S. sanctions are enforced in full.”

Israel’s Prime Minister Benjamin Netanyahu vowed on Sunday to “demolish Hamas” as his troops prepared to move into the Gaza Strip in pursuit of Hamas militants whose deadly rampage through Israeli border towns shocked the world.

Iran warned on Saturday that if Israel’s “war crimes and genocide” are not stopped then the situation could spiral out of control with “far-reaching consequences.”

With fears of the conflict escalating, U.S. Secretary of State Antony Blinken will return to Israel on Monday to talk “about the way forward” after several days of shuttle diplomacy between Arab states.

The US last week imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of USD 60 a barrel, an effort to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine.

Russia is one of the world’s top crude exporters, and the tighter US scrutiny of its shipments could curtail supply.

(Reporting by Yuka Obayashi in Tokyo and Emily Chow; editing by Edwina Gibbs and Sonali Paul)

Oil falls more that USD 1 a barrel on Venezuela deal hopes

HOUSTON, Oct 16 – Oil futures fell more than USD 1 a barrel on Monday as expectations rose that the US and Venezuela could soon reach a deal easing sanctions on Venezuelan crude exports, while traders said the Israel-Hamas conflict did not appear to threaten oil supplies in the short term.

Brent crude futures settled at USD 89.65 a barrel, down USD 1.24, or 1.4%. US West Texas Intermediate crude (WTI) fell USD 1.03, or 1.2%, to finish at USD 86.66 a barrel.

Venezuela’s government and opposition will return to political negotiations this week after nearly a year, the two sides said, while sources said the US has reached a preliminary deal to ease sanctions on Venezuela’s oil industry in return for a competitive, monitored presidential election in Venezuela next year.

“The reported deal … would help to raise the country’s oil output from very depressed levels,” said William Jackson, chief emerging markets economist for Capital Economics.

“But the sector requires enormous investment to return output to the levels seen only a decade ago,” Jackson added. “And this wouldn’t materially affect the deficit in the global oil market in the near term.”

Both oil benchmarks had surged last week on fears the conflict in the Middle East could widen, with global benchmark Brent gaining 7.5% in its highest weekly gain since February.

Monday’s falling prices appeared to “a breather to take in events in the Middle East” as opposed to expected production increases in Venezuela, said Andrew Lipow, president of Lipow Oil Associates.

“Negotiations with Venezuela could lead to a surge in exports of crude oil that is already in inventory,” Lipow said. “But a surge in production is a ways off given the decrepit state of the Venezuelan energy infrastructure.”

Traders said the war between Israel and the Palestinian Islamist militant group Hamas so far remained focused in the Gaza Strip.

“It’s more of the same on Monday in terms of the conflict in the Middle East being contained from affecting crude oil supplies,” said John Kilduff, partner with Again Capital LLC.

Israeli air strikes on Gaza intensified on Monday after diplomatic efforts by the US to arrange a ceasefire in southern Gaza failed.

Russia has also entered the diplomatic fray, with President Vladimir Putin set to hold talks with Iran, Israel, Palestinians, Syria, and Egypt.

Heightened tensions in the Middle East may have compounded other risk factors to push prices higher last week, market sources said.

The US last week imposed the first sanctions on owners of tankers carrying Russian oil priced above the Group of Seven’s price cap of USD 60 a barrel, an effort to close loopholes in the mechanism designed to deprive Moscow of revenue for its energy sales.

“The sudden decision on tightening up of sanctions on ship owners carrying Russian crude over the USD 60/barrel limit by the US started to niggle and so did the Russian/Saudi meeting concluded by President Putin stating that OPEC+ were achieving ‘stability,'” said PVM analyst John Evans, referring to the price rises at the end of last week.

(Reporting by Erwin Seba in Houston; additional reporting by Robert Harvey in London, Yuka Obayashi in Tokyo and Emily Chow; Editing by Marguerita Choy and Paul Simao)

Dollar buoyed by safe-haven bids, rate jitters

SINGAPORE, Oct 16 – The dollar was on the front foot on Monday in cautious trade as tensions in the Middle East escalated, while investors awaited a speech by Federal Reserve Chair Jerome Powell later this week for further clues on the US central bank’s rate outlook.

The Israeli shekel fell to more than an eight-year low of 3.9900 per dollar in early Asia trade, after the country’s Prime Minister Benjamin Netanyahu vowed on Sunday to “demolish Hamas” as his troops prepared to move into the Gaza Strip in pursuit of Hamas militants.

Carry trades funded by the yen could be the biggest casualty of further escalation in the war, analysts said, as global investors who have for months been shorting the yen to invest in higher-yielding currencies buy it back as a safe haven.

The yen was last steady at 149.53 per dollar.

The Japanese currency, which is near potential intervention levels around 150, could also rally if the Fed has to stop hiking rates even as the Bank of Japan feels compelled by domestic inflation to tighten policy.

The BOJ has continued to maintain its ultra-easy policy settings although markets are rife with speculation that it could move to gradually exit from the accommodative stance sooner rather than later.

“Obviously war is inflationary, disrupts growth, and threatens risk assets,” James Malcolm, head of FX strategy at UBS in London.

“The largest overhang I can see in this regard is dollar-yen, where the BOJ must pivot regardless and the carry trade that has built up now amounts to nearly half a trillion dollars.”

Elsewhere, the safe-haven dollar stood near a one-week high against a basket of currencies as risk sentiment remained fragile, pinning the euro near a one-week low hit on Friday.

The single currency was last 0.11% higher at USD 1.0522.

Sterling gained 0.06% to USD 1.21515, though it was similarly languishing near Friday’s one-week trough of USD 1.2123.

“I view what’s going on in Israel as a regional conflict, which typically does not have meaningful impacts on financial markets over time,” said David Chao, Invesco’s global market strategist for Asia Pacific ex-Japan.

“I don’t see it altering growth trajectories of the major economies nor does it make the Fed more hawkish. If anything, I think the Fed is less inclined to tighten going forward given the perception of heightened risks.”

The Australian dollar, often used as a proxy for risk appetite, gained 0.19% to USD 0.6309, after sliding 1.4% last week.

On the policy front, traders looked to Fed Chair Powell’s speech before the Economic Club of New York later this week for clues on how much further US interest rates could rise, after data last week showed consumer prices increased more than expected in September.

Markets are largely expecting the Fed to keep rates on hold when it announces its next monetary policy decision in November, according to the CME FedWatch tool, though they see a roughly 32% chance the central bank could deliver a rate hike in December.

In other currencies, the New Zealand dollar gained 0.33% to USD 0.5904.

New Zealand’s center-right National Party led by Christopher Luxon will form a new government with its preferred coalition party ACT, as Prime Minister Chris Hipkins conceded his Labor Party could not form a government after Saturday’s general election.

“The kiwi dollar jumped this morning following a clear and decisive victory of New Zealand’s opposition National Party,” said Kyle Rodda, senior financial market analyst at Capital.com.

“It appears the Nationals are in the position to win power while only requiring one coalition partner, excluding the populist New Zealand First party.

“The kiwi has jumped on the prospect such dysfunction has been avoided.”

(Reporting by Rae Wee and Vidya Ranganathan; Editing by Shri Navaratnam)

Nervous markets eye Gaza as oil hovers above USD 90

TOKYO, Oct 16 – Crude oil hovered above USD 90 a barrel while equities were weak and the safe-haven dollar was firm on Monday as investors nervously watched for whether escalating violence in Gaza would cause the conflict to spread beyond Israel and Hamas.

Israel’s shekel sank to a nearly eight-year low, after the country’s prime minister, Benjamin Netanyahu, vowed to “demolish Hamas” in retaliation for the rampage on Oct. 7 that killed 1,300 people in the worst attack on civilians in Israel’s history.

US Secretary of State Antony Blinken is visiting the region, seeking to prevent further escalation. Netanyahu agreed to lift a blockade of water supplies to parts of southern Gaza after speaking with US President Joe Biden.

Brent crude futures reached a new recent high of USD 91.20 on Monday before easing back slightly to USD 90.84, following Friday’s 5.7% surge.

Japan’s Nikkei share average fell more than 1%, while Australia’s S&P/ASX 200 index lost 0.15% in early trading. New Zealand’s equity benchmark slid 0.9%.

On Friday, the pan-European STOXX 600 index lost 0.98 and New York’s S&P 500 declined 0.50%, although US stock futures pointed 0.18% higher on Monday.

“The situation is dynamic and it’s too early to say if the hedges placed on Friday are unwarranted, but there have been pockets of positive news flow,” Chris Weston, head of research at Pepperstone, wrote in a note, citing the resumption of water supplies as one example.

“Risk and energy markets will look for headlines and actions from Iranian officials who have stated they have a duty to come to the aid of the Palestinians.”

Benchmark 10-year US Treasury yields were little changed at 4.6434%, following a more than 8 basis point decline on Friday amid demand for the safety of bonds.

Currencies overall retraced some of their moves from the end of the week, with the US dollar index easing slightly to 106.55 from as high as 106.79 on Friday.

The euro rose 0.1% to USD 1.0522 while the yen was little changed at 149.505 per dollar.

However, Israel’s shekel was weaker, last trading at 3.9850 per dollar after weakening to 3.9900 earlier in the day for the first time since April 2015.

(Reporting by Kevin Buckland in Tokyo; Editing by Lincoln Feast.)

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Inflation Update: Prices rise even slower in May

Monthly Recap: BSP to outpace the Fed in rate cuts