Money Monday
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Market Data
Local
Global
*Data as of 4pm WAT
Market News
Local
Ajaokuta Steel Complex to generate $1.6bn, create 500,000 jobs - BNR
Ajaokuta Steel Company, if fully operational, holds substantial revenue potential for Nigeria, with the capacity to generate significant income through steel production and exports. The complex could not only produce approximately 500,000 jobs but also contribute an extra $1.6 billion in annual revenue to the federal government.
Global
Israel Tensions Fuel a 5% Surge in Crude Oil Futures - Bloomberg
Oil prices surged following a surprise attack on Israel by Hamas, causing increased Middle East instability. The conflict, resulting in over 1,100 casualties, has limited direct impact on global oil supply, but it could draw the U.S. and Iran into a broader conflict. Iran, a significant extra crude source in recent times, may face more U.S. sanctions.
Stocks tumble as Middle East conflict rattles markets - Yahoo Finance
Stocks dipped as the Middle East conflict compounded existing market concerns about interest rates and inflation. The Dow Jones Industrial Average opened down around 0.2%, while the S&P 500 dropped approximately 0.5%, and Nasdaq Composite contracts fell nearly 1%.
Weekly Investment Watchlist
Market Commentary:
Asia - Pacific:
Asian equities were mostly tilting lower on Monday. Mainland China markets opened lower as they marked to market following last week’s holiday. Hong Kong was set to resume trading shortly after a typhoon-induced cancellation of the morning session. Australia’s stocks were higher, partly influenced by the positive read-through from the U.S. on Friday, while India’s market opened lower. South Korea, Taiwan, and Japan markets were closed for the day.
During the Golden Week holiday in China, there was strong activity in tourism, with tourism revenue totaling CNY753.4 billion ($103 billion). This marked a significant increase of 130% YoY and surpassed pre-pandemic levels by 1.5% (Bloomberg). The total number of travelers also rose by 71% YoY to 826 million. However, there’s a cautious tone as spending per tourist remained 2% below 2019 levels.
There’s emerging speculation that the Bank of Japan (BoJ) might further revise its Yield Curve Control (YCC) policy at the October Monetary Policy Meeting (MPM). This is due to elevated U.S. Treasury yields pulling the yield on Japanese Government Bonds (JGB) 10-year closer to the current effective cap of 1%. However, it’s uncertain if the BoJ will make a tweak at this stage, as they continue to effectively ease monetary policy by buying bonds whenever the JGB yield crosses 0.75%.
Europe, Middle East, Africa:
European equity markets experienced losses, with financials continuing to lead due to rising interest rates. Defensive sectors outperformed cyclicals.
The ongoing war in the Middle East remains a significant concern for global growth, dominating news and discussions in the region.
European earnings season is about to commence. The blended earnings growth for the Stoxx 600 is at -8.2%. Some analyst estimates suggest earnings will decline by as much as -17% YoY during this season, with the exception of energy companies that may benefit from the recent rally in oil prices. Industries such as industrials, basic resources, and utilities are expected to perform poorly this season, while travel and leisure may fare better.
The Americas:
According to BoFA’s flow monitor, it’s noted that after this week, their model for Commodity Trading Advisors (CTAs) is nearly flat in terms of positions in the S&P 500. Next week, the trend strength is expected to turn negative, indicating a potential shift from a bearish to bullish price path. This suggests that actual CTAs may either already be short (but not stretched) or are also reducing their positions and on the verge of turning short. This is something to watch for this week, especially considering the potential for heightened volatility due to global events, the start of earnings season, and significant macroeconomic data releases.
It’s a relatively quiet day in the markets, with the bond market closed for Columbus Day. The focus is on preparing for earnings season, major bond auctions, and the upcoming release of the last Consumer Price Index (CPI) print before the Federal Open Market Committee (FOMC) meeting in November.
The Week Ahead:
Monday:
Tuesday:
Wednesday:
Producer Price Index (PPI) (US)
Thursday:
Gross Domestic Product (GDP) (UK)
Consumer Price Index (CPI) (US)
Unemployment Claims (US)
Friday:
UoM Consumer Sentiment (US)
Investment Tip of The Day
Stay Prepared for Black Swan Events: While rare, black swan events (severe and unexpected market shocks) can have a profound impact. Maintain a diversified portfolio, stay informed, and have contingency plans in place for extreme scenarios.
Meme of the Day
