Global markets see mixed performances due to Mideast tensions, US inflation statistics
Date
10/7/2024 4:48:10 AM
(MENAFN) Global markets experienced a mixed performance last week, influenced by ongoing tensions in the Middle East and inconsistent signals regarding US economic activity. All eyes are now focused on the upcoming US inflation data, which is expected to provide further insights into the economic landscape. Optimism about a potential “soft landing” for the US Economy has grown, with projections suggesting that inflation may drop to the Federal Reserve's target of 2 percent, although concerns about a possible recession linger.
Federal Reserve Chairman Jerome Powell stated at a recent event that there is no need for further cooling in labor market conditions. If the economic outlook remains stable, there could be two additional rate cuts this year, totaling 50 basis points. Other Fed officials indicated their willingness to consider a significant rate cut if employment data weakens, suggesting that urgent action might be taken in response to unfavorable labor market conditions.
In the Middle East, tensions escalated when the Iranian Revolutionary Guards launched a ballistic missile attack on Israel. The situation remains precarious, with threats of retaliation from Israel and continued threats from Iran contributing to a heightened atmosphere of conflict. Despite positive signals from US employment data indicating a potential soft landing for the economy, analysts caution that geopolitical risks in the Middle East may dampen market risk appetite.
On the economic front, the US Institute for Supply Management (ISM) services Purchasing Managers' Index (PMI) rose by 3.4 points in September, reaching its highest level since February 2023 at 54.9 points. Following these developments in the US economy, money market estimates suggest a near certainty of a 25-basis-point rate cut from the Fed in November.
Last week, the US-10 Year Treasury bond yield increased by 21 basis points to 3.96 percent, and the US Dollar Index rose by 2 percent to 102.5. Meanwhile, gold prices climbed 0.2 percent to USD2,653.5 per Troy ounce, and Brent crude oil prices surged by 8.3 percent to USD77.9. On the New York Stock Exchange, the Nasdaq and Dow Jones indices rose by 0.1 percent and 0.09 percent, respectively, while the S&P 500 dipped by 0.09 percent. The geopolitical tensions in the Middle East also led to a rise in stock prices for defense and energy companies.
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