Market commentary ahead of the US open on the ongoing Israel-Hamas war and its potential effects on markets today, from Kyle Rodda, Senior Market Analyst at Capital.com.
17-10-2023 – “Equities have rebounded, ostensibly on efforts by the international community to de-escalate and contain tensions in the Middle East. The latest news is US President Joe Biden will head to Israel on Wednesday to hold talks with Prime Minister Benjamin Netanyahu before heading to Jordan to meet the President of the Palestinian Authority, Mahmoud Abbas.
Markets fear a ground offensive by Israel that could ignite a larger and more complicated regional conflict that risks regional supply chains, energy output, economic growth and financial stability. While the balance of risks appears tilted to such an outcome, the presence of President Biden in the region potentially lowers the odds of such an offensive in the coming days, providing markets with some breathing room, if only for a small window.
Tonight’s trade comes with heightened event risk, with UK average earnings data, Canadian inflation data, and US Retail Sales data on the docket. Core US Retail Sales are forecast to have grown at a slower pace of 0.2% last month, down from 0.6% from the month prior. Given the slew of recent strong data and signals of US economic resilience, the markets will likely remain sensitive to any upside surprise. Two weeks from the next Fed decision, markets are implying only a slim 10% chance of a hike at that meeting. Given the low odds, even a modest surprise in US Retail Sales numbers could boost the implied probabilities of a hike and set off another rise in yields, a firmer Dollar, and renewed equity market volatility.”
Leave a Reply
You must be logged in to post a comment.