Asian Stock Futures Rise, Following Wall Street’s Lead amid Geopolitical Tensions
Asian Stock Futures Reflect Wall Street’s Rally
Asian stock futures in Japan, Hong Kong, and Australia are on the rise, mirroring the positive performance of Wall Street on Tuesday. This surge comes as Federal Reserve officials downplay the chances of a Fed rate hike in 2023, despite the recent increase in Treasury yields. Additionally, the Israeli-Hamas conflict, which has caused oil prices to spike due to potential threats to energy supplies, has also led to significant gains for gold as investors seek safe havens.
Stock Market Rallies as Fed Officials Address Rising Treasury Yields
The stock market rallied on Monday after Fed vice chair Philip Jefferson and Dallas Fed president Lorie Logan highlighted the impact of rising Treasury yields on monetary policy. They emphasized the role of high bond yields in maintaining restrictive financial conditions for price stability. Despite US bond markets being closed for Columbus Day and Indigenous Peoples Day, futures trading signaled an increase in government debt demand.
Israeli-Hamas Conflict’s Impact on Global Markets
The Israeli-Hamas conflict has had significant repercussions on global markets. A surprise attack by Hamas on Israel led to a rebound in crude prices, with West Texas Intermediate rising significantly. This sparked a surge in oil and gas stocks like ExxonMobil and Chevron, as well as defense contractors such as RTX Corp, Northrop Grumman, and Lockheed Martin. However, Israeli companies Teva Pharmaceutical Industries Ltd. and Check Point Software Technologies Ltd. saw a decrease in US trading.
Mixed Results for Airlines and Disney Stocks
While oil and gas stocks experienced gains, airlines incurred losses. However, Disney stocks rose after activist investor Nelson Peltz increased his stake. Analysts have noted the absence of potential oil supply increases in the oil rally.
UBS Favors Fixed Income Amidst Geopolitical Concerns
UBS Global Wealth Management favors fixed income over equities in the midst of ongoing geopolitical issues. Morgan Stanley’s Michael Wilson has warned about fiscal policy constraints posing risks to US stocks, especially at a time when the Fed is fighting high inflation.
Key Events to Watch This Week
This week, important events to watch out for include the forthcoming Federal Open Market Committee meeting, the release of last meeting’s minutes, and the latest world economic outlook from the IMF. Additionally, quarterly earnings results from Citigroup, JPMorgan, Wells Fargo, and BlackRock will be announced.
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