Headlines:
- Oil rises as hopes for a deal fade amid growing prospects of another US attack on Iran
- US futures tumble as AI rally faces fresh scrutiny despite solid Meta earnings
- Chart of the day: Gold price falls below $4,100 as sellers threaten another breakdown
- Gold drops as Middle East tensions escalate, but growth concerns could provide support
- EUR/CHF falls to three-month lows as French bond turmoil raises fresh euro risks
- Ethereum tumbles as renewed Middle East tensions weigh on risk sentiment. What’s next?
- France business confidence improves in October but cracks remain beneath the surface
- US-Iran tensions refuse to fade as fresh Strait of Hormuz attacks keep oil markets on edge
Markets:
- JPY leads, NZD lags on the day
- Brent crude up 2.8% to $111.88
- 10-year Treasury yields down 9 bps to 5.05%
- Gold up 2.0% to $4,060
- European equities tumble; S&P 500 futures down 1.0%
- Bitcoin down 3.4% to $81,738
It’s been a while since we’ve reverted back to the classic risk-off move in markets, but this is about as close as it gets.
As geopolitical tensions linger and equities are being sent to the cleaners, we’re seeing a return of old school risk-off flows in markets. The dollar and yen are bid among major currencies while bonds are also trading higher i.e. yields lower. The only notable difference is in commodities as oil is up and gold is down instead.
US-Iran tensions are still messing around with the risk mood, keeping oil markets on edge and that is seeing Brent crude push above $111 to its highest since May. And as inflation fears return, that is causing tech stocks to tumble lower alongside concerns over the AI rally as investors start to question whether the massive spending can produce the necessary results to support the already lofty valuations.
S&P 500 futures are down 1.0% while Nasdaq futures are down 1.7%. And over in Europe, French fiscal risks continue to weigh on the overall mood with the France-Germany 10-year yield spread breaking out to 170 bps – its highest since 2011. That is seeing stocks erase the gains from yesterday with the DAX falling by 0.8% and CAC 40 down by 1.2%.
In the major currencies space, it’s one of those classic days where the dollar, yen, and franc are all bid against the rest of the bloc. USD/JPY is down 0.7% to 157.05 while EUR/USD has tumbled from 1.1240 to 1.1195 during the session, as the euro struggles amid growing fiscal worries in France. EUR/CHF itself is also falling to a three-month low in testing the 0.9200 level.
Besides that, gold is weighed down after weeks of consolidation in a drop below $4,100 today. That is leading to further selling pressures as the precious metal is unable to catch a break in falling to $4,060 on the day. And that is despite Treasury yields also dropping hard, with 10-year yields easing lower to 5.05% as investors look to be favouring growth concerns once again.
This article was written by Justin Low at investinglive.com.