Market Focus: Volatility Fueled by the Middle East and Powell

Middle East tensions and Powell comments fuel Asia-Pacific market volatility; oil prices rise; and U.S. data is awaited.

Global Markets Overview:

• Asian Stock Markets:
  • Nikkei 225: Down 0.90%
  • Shanghai Composite: Down 0.30%
  • Hang Seng Index: Up 0.78%
  • ASX 200: Up 0.63%
• Commodities:
  • Gold: $2,545.35 (+0.39%)
  • Silver: $30.23 (-0.27%)
  • Brent Crude Oil: $78.60 (+0.69%)
  • WTI Crude Oil: $75.32 (+0.68%)
• Rates:
  • U.S. 10-year yield: 3.784%
  • U.K. 10-year yield: 3.914%
  • Germany 10-year yield: 2.225%
• Economic Data:
  • USD Core Retail Sales m/m: 0.3% vs. -0.2% expected
  • USD Retail Sales m/m: -0.3% vs. -0.3% expected

Market Focus: Volatility Fueled by the Middle East and Powell

Markets Update:

Asia-Pacific markets displayed a mixed performance on Monday amid escalating tensions in the Middle East and recent remarks from U.S. Federal Reserve Chairman Jerome Powell.

Over the weekend, tensions between Israel and Hezbollah flared as Israel’s Air Force targeted Hezbollah sites in Lebanon. In retaliation, Hezbollah launched over 320 rockets towards Israel. This latest exchange follows the assassination of Hezbollah’s senior commander, Fuad Shukr, last month. While Hezbollah has hinted it is not planning further strikes, Israel’s Foreign Minister has assured that the country is not seeking a full-scale war.

The escalation in the Middle East influenced commodity markets, with oil prices increasing slightly. Brent Crude oil rose by 0.69% to $78.62 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.68%, reaching $75.34 per barrel. The rise in oil prices reflects investor concerns about supply disruptions amid the ongoing conflict.

In Asia, market reactions varied. Japan’s Nikkei 225 fell by 0.90%, and the Topix index decreased by 1.13%, reflecting broader regional concerns. The Japanese yen strengthened by 0.33% to 143.9, marking its highest since the early August stock sell-off. Meanwhile, South Korea’s Kospi fell by 0.24%, and the Kosdaq index declined by 0.96%. In contrast, Australia’s S&P/ASX 200 gained 0.68%, and Hong Kong’s Hang Seng index increased by 0.79%, while the mainland Chinese CSI 300 index slipped by 0.15%.

In the U.S., markets closed positively on Friday following Powell’s comments at the Jackson Hole Economic Symposium. The Dow Jones Industrial Average rose 1.14%, the Nasdaq Composite advanced 1.47%, and the S&P 500 increased by 1.15%. Powell’s remarks suggested potential future rate cuts, although he did not provide specifics on timing or scale. He emphasized that ongoing data and the evolving economic landscape would guide decisions.

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