FX Careers

General Market Analysis | 10 October 2023

Markets Rally in the Face of Conflict

US markets almost reassuringly shrugged off global geo-political concerns to rally yesterday as they focused on Fed comments with a more dovish skew. All three of the major indices finished higher on the day, the Dow closing up 0.59%, the S&P 0.63% and the Nasdaq up 0.39%. The dollar started the day on the front foot as safe-haven flows hit the market in light of the conflict in the Middle East but ultimately finished the day lower as US fundamentals topped the influence of geo-political concerns. US bond markets were shut for Columbus Day and investors will be interested to see where they open on Tuesday. Some safe-haven assets did remain in demand throughout the day with both Oil and Gold remaining at elevated levels relative to Friday’s closing levels.

Oil in Focus for Investors this Week

Investor focus will be heavily on Oil this week with fear of a widening conflict in the Middle East at the forefront of many people’s minds. Traders are expecting geo-political risks to outweigh fundamentals in the days and weeks ahead and they come at a time when Oil has been more volatile than usual anyway. Production cuts have led to a strong rally in oil over the last couple of months and even though we have seen a drop from recent highs in the last couple of weeks, if the conflict was to spread across the region, traders are expecting both WTI and Brent to break through recent highs and challenge the key $100/b level.

Busy Day Ahead for Traders – Middle East Still in Focus

Traders are expecting another busy day today as they continue to focus on any fresh news out of the Middle East. It is a relatively quiet day in terms of economic data releases, although there are a few events that will hold traders’ attention. In the Asian session, Australian business confidence data is due out from both Westpac and NAB and later in the day we may have the latest Loan data out of China – although this can come anytime over the next few days. The European and US sessions have no major data releases but we do hear from ECB President LaGarde as well as FOMC members Waller and Kashkari, and as we saw yesterday, central bank chat is still dominating moves in markets.