Aviso Weekly Market Pulse: October 9th – October 13th

Oct 16, 2023

Market developments

Equities:
In response to signs of Israel preparing for a ground invasion of Gaza, stock prices fell as traders sought safety. Big tech stocks, represented by the Nasdaq, saw a 1.3% drop on Friday and closed slightly negative for the week, while the S&P 500 closed up 0.4%. U.S. earnings started off strong as Delta Airlines, JPMorgan, Wells Fargo, and Citigroup saw gains after reporting positive earnings. There is some unease heading into the weekend as political and economic risks could lead to a deterioration in the U.S. economy, including issues related to Russia’s invasion of Ukraine, the Hamas attack on Israel, and complications in the U.S.-China relationship.

Fixed income:
In the U.S. bond market, Treasuries gained across the curve on Friday, reversing a bear-steepening move from the previous day. Demand for safe havens increased due to the likelihood of the ground invasion in Gaza by Israel. The University of Michigan sentiment cooled things off a little as they now estimate a higher-than-expected level of inflation over the next year. The U.S. 10-year yields closed the week down 18bps to 4.62% while the Canadian 10-year yields closed just below 4%.

Commodities:
Oil prices surged nearly 6% higher this week due to growing geopolitical tensions, particularly violence in Israel, which raised concerns about a broader regional conflict. Escalating Middle East tensions were a key driver of this oil price increase, with concerns about potential supply disruptions if the conflict spreads to involve other oil-producing nations.

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