After Friday’s surprisingly strong jobs data for September, another test for US market sentiment and momentum awaits this week with the release of September’s consumer and producer price inflation data.
It has become a monthly ritual, akin to last week’s jobs data, as confusion and fears regarding interest rates and the Fed’s monetary policy stance persist. There is a chance that the inflation figures may provide some clarity, especially if they show an easing after the rises seen in July and August.
Despite the strong jobs data, market concerns remain, particularly about rate cuts. Last week saw a temporary dip in the Dow, S&P 500, and Nasdaq, followed by a strong rebound, marking the best day in a week or more. Interestingly, US 10-year bond yields rose to 4.80%, the highest in 17 years, which didn’t impact equities negatively. Meanwhile, the US dollar slipped slightly, allowing oil prices to edge higher, along with gold futures.
The week ended positively, with the Dow gaining 288.01 points (0.87%), the S&P 500 up 1.18%, and the Nasdaq jumping 1.60%. The S&P 500 broke a four-week negative streak, while the Nasdaq had a positive week, but the Dow ended slightly lower.
The ASX is set for a substantial rebound today, with Eurozone and Japanese shares falling for the week, and Chinese markets closed for a week-long holiday.
Despite the Reserve Bank of Australia keeping interest rates unchanged, Australian shares remained under pressure, with the ASX 200 falling 1.3% for the week. US and Australian shares have both experienced an approximate 8% fall from their July highs to recent lows.
In other news, Rivian initially delivered better-than-expected quarterly figures but announced a $US1.5 billion green convertible bond issue, leading to concerns about potential dilution of existing shareholders. Their preliminary sales estimate for the full year also disappointed investors, resulting in a 25% drop in shares.
Exxon Mobil’s reported $US60 billion takeover talks with Pioneer Natural Resources had a notable impact on share prices, with Exxon shares falling 1.6% and Pioneer shares rising nearly 10.5%.
UK Metro Bank shares faced a challenging week, dropping 30% as the bank revealed a need to raise £600 million to remain in business. UK regulators refused to ease capital constraints on its mortgage portfolio, reminiscent of stricken Chinese property companies like Evergrande and Countrywide.
Commodity prices were affected by market tensions, with gold, copper, iron ore, coal, and oil experiencing losses. Brent and US West Texas Intermediate (WTI) crude prices started the week down over 8% from the previous week.
Despite settling slightly higher on Friday, Brent and WTI crudes were still down 8.34% and 8.77%, respectively. Oil rig numbers in the US continued to decline, with 497 operating compared to 602 a year earlier. Commercial crude stockpiles in the US unexpectedly declined, while petrol inventories increased by 6.5 million barrels.
OPEC and its allies, led by Russia, held a ministerial meeting with no policy change, contributing to uncertainty in oil markets. Gold prices rose slightly, leaving gold with a small weekly loss. Copper prices saw a Friday rebound but ended the week down 2.7%. Iron ore prices in Singapore also declined, while thermal coal futures at Newcastle faced downward pressure.
Overall, market dynamics continue to be influenced by a complex web of factors, from economic data releases to geopolitical developments, creating a volatile environment for investors.