On Tuesday Iran launched a missile attack against Israel, with most missiles being intercepted but Israeli Prime Minister Netanyahu vowing to retaliate. Oil managed to benefit from the worsening conflict on concerns that this could disrupt supply. Oil prices did however see some pullback following comments from US President Biden that discouraged Israel from targeting Iranian oil facilities. Nevertheless, for the week Brent crude rose 9% to settle at $78 a barrel, in its biggest weekly gain since January 2023. Another factor that weighed on sentiment was a strike by dockworkers at US East Coast and Gulf Coast ports, and its implications on supply chain delays. However, a wage deal was agreed, and the ports resumed operations on Friday.
Also, helping to lift the mood on Friday was the much-awaited jobs report. Non-farm payrolls rose by 254,000 in September, much higher than the 140,000 estimated, while August’s gain was also revised higher. This managed to lift stocks back into positive territory for the week. The Dow Jones Industrial Average ended at a record high and was up 0.1%, while the S&P 500 and Nasdaq Composite were up 0.2% and 0.1% respectively. Meanwhile, US Treasury yields ticked higher in response to the jobs report, which prompted traders to increase their bets of a 25bps rate cut from the Federal Reserve at its November meeting. The 10-year yield ended at 3.98% in one of its biggest weekly gains of the year.
European markets also experienced an uptick after the US jobs print however this was not enough to offset earlier losses as caution around the Middle East prevailed. The pan-European STOXX 600 ended the week 1.8% lower, with regional indices also down. The energy sector was the best performer while personal and household goods as well as autos were some of the weakest. Losses in autos came even after a 1.6% rise on Friday following news that the EU will proceed with tariffs on China-made electric vehicles. Eurozone inflation cooled to 1.8% in September, marking the first time in three years that it has dropped below the European Central Bank’s 2% target.
Japan’s Nikkei 225 ended the week 3% lower. Much of this was due to losses logged early in the week in response to Shigeru Ishiba’s victory in the Liberal Democratic Party’s leadership contest. The yen strengthened as Ishiba’s monetary policy views were perceived as being slightly hawkish, although the yen managed to later weaken as he adopted a more dovish tone, commenting that the environment didn’t currently warrant an additional interest rate hike. In China, optimism around the previous week’s stimulus announcements continued. Due to the Golden Week holiday, the Shanghai Composite was only open on Monday, so notched a gain of 8.1%. In Hong Kong, markets were shut on Tuesday, but the Hang Seng index jumped 10.2%.