Macro Update
Markets trade unevenly ahead of earnings season: Global equities moved erratically as investors prepared for corporate results, with South Korean shares falling 3.1% while S&P 500, Nasdaq and European futures rose 0.3% to 0.6%. Trading remained subdued with Japan closed for a holiday and US markets partly shut.
Oil retreats on hopes of Russian supply relief: Brent crude fell around 1.4% to $103.30 a barrel, while US crude dropped 1.7% to $90.29 after Donald Trump announced an energy ceasefire between Ukraine and Russia and a diesel supply agreement with Moscow. However, Houthi attacks on Saudi Arabia and tanker strikes near the Strait of Hormuz kept prices elevated.
Dollar stays near 18-month peak amid geopolitical tensions: The dollar index held at 102.16 as escalating Middle East conflict kept investors cautious. The euro remained near $1.121 after five consecutive weekly declines amid French fiscal concerns, while the yen traded at ¥158.24 per dollar as the threat of Japanese intervention deterred speculators.
US inflation report in focus as rate-hike bets build: Economists expected Wednesday’s CPI data to show annual inflation rising to 3.7% on higher energy costs, while core inflation was forecast at 2.5%. Markets priced in an 18% chance of a Fed hike this month and around 85% by December, following a surge in Treasury yields to 24-year highs.
Major US banks open third-quarter earnings season: JPMorgan, Goldman Sachs, Citigroup and Wells Fargo are due to report on Tuesday, with S&P 500 earnings forecast to rise more than 30% year on year. However, much of the expected growth is concentrated in technology and banking shares have fallen 7.5% over the past month.
Gold edges up as dollar and oil prices ease: Spot gold gained 0.1% to $4,198 an ounce, supported by a weaker dollar and lower oil prices that helped temper inflation concerns and expectations of further rate increases. Silver also advanced 0.4% to $61.02 an ounce.