Middle Eastern Upheaval Taking a Toll on Global Financial Markets
October 9, 2023
The war between Israel and Hamas is expected to exact extensive repercussions affecting not only those combatants but also the policies of Saudi Arabia, Ukraine, Russia, Iran, the United States, China, and NATO.
Despite holiday closures today in the United States (Columbus Day), Japan (Sports/Health Day), Canada (Thanksgiving), South Korea (Hangul Day), and Taiwan (National Day), financial markets have experienced more churning than a typical Monday.
Prices for oil, bitcoin and gold have respectively jumped 3.4%, risen 1.3% and dropped 1.5%.
The Israeli shekel lost over a percent against the dollar despite significant intervention support by the Bank of Israel.
The weighted DXY dollar index is 0.4% stronger, with overnight appreciations of 0.5% against the euro, sterling, and peso, 1.0% relative to the Russian ruble, and 0.3% versus the Australian dollar and Turkish lira. The yen, by contrast, edged 0.1% higher against the U.S. currency.
While U.S. banks and therefore the Treasury market are observing the Columbus Day holiday, aka Indigenous People’s Day, the stock market will be open for business, and U.S. stock futures point to a likely early loss of more than 0.5%. European share prices show losses of 0.9% in Spain, 0.7% in Germany, 0.5% in France and 0.4% in Italy, but the British Ftse has ticked up 0.2%. The Shanghai Composite traded after a full week’s closure with a drop of 0.4%, and the Indian and New Zealand stock markets closed 0.7% weaker.
Sovereign debt yields in Europe have been mixed with rises of five basis points in Italy and France but one basis point dips in Germany and Great Britain.
The International Monetary Fund and World Bank meetings in Morocco go on all week and can be expected to create market-moving news from time to time.
Among data released this Monday, German industrial production fell for a fourth straight month and fifth time in a half year. The slide in August of 0.2% was associated with a 2.0% year-on-year decline, which is the steepest such drop in eight months. A 25.8% year-on-year plunge in Irish industrial production was the largest 12-month decline since early 1981.
Czech industrial production rose 0.2% in August but was 1.7% below its year-earlier level. The Czech trade deficit in August was 87% smaller than a year earlier and only above half the size of July’s deficit, leaving the year-to-date balance still in surplus to the turn of CZK 65 billion.
Denmark’s August current account surplus of DKK 21.4 billion was the smallest in 3 months and down from a DKK 32.4 billion average in January-July.
Ireland’s construction purchasing managers index printed at a 3-month high last month but, at 48.6, was below the 50 level that separates expanding from contracting activity for the eleventh time in the past 12 months.
Latvian CPI inflation of 3.3% and Lithuanian consumer price inflation of 3.7% were at respective 26- and 27-month lows in September. A year earlier in September 2022, those countries’ inflation rates crested at 320-month highs of 22.2% and 24.1%.
Copyright 2023, Larry Greenberg. all rights reserved. No secondary distribution without express permission.
Tags: financial market reaction to Mideast war, German industrial production, Latvian and Lithuanian CPI inflation
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