General Daily Market Recap – October 1, 2024

Volatility was relatively low for most asset classes early on, with the exception of crude oil, as geopolitical headlines took center stage before risk-off flows intensified.

Meanwhile, mixed US leading indicators, namely the ISM manufacturing PMI and JOLTS job openings data, were still positive for the dollar.

Here are the market updates you need to know!

Titles:

• Japan Tankan Production Index for June: 13 (12 expected, 13 previous); non-production index at 34 (33 previous, 32 expected)
• Japan’s Jibun Bank final manufacturing PMI was revised higher from 49.6 to 49.7 in September
• The Bank of Japan’s summary of views highlighted uncertainties in overseas economies
• Iran launched a missile attack on Israel in retaliation for the removal of the Hezbollah leader
• August Australian retail sales at 0.7% m/m (0.4% est., previous reading up from 0.0% to 0.1%)
• Australian building approvals fell 6.1% m/m (-4.3% est) in August, July growth up from 10.4% to 11.0%
• Australian commodity prices fell 10.1% y/y in September, the previous reading fell from a 5.4% fall to a 6.0% fall
• Swiss retail sales improved from 2.9% to 3.2% (2.6% expected) in August, July data revised higher from 2.7%
• Swiss Procure.ch manufacturing PMI improved from 49.0 to 49.9 (47.9 expected) in September; Services PMI fell from 52.9 to 49.8, with all subcomponents losing momentum
• Flash CPI for the euro area for September 2024: 1.8% y/y as expected vs. 2.2% y/y previously
• Eurozone HCOB final manufacturing PMI was revised from 44.8 to a nine-month low of 45.0 (44.8 expected) in September
• US ISM Manufacturing PMIs for September: 47.2 (48.3 forecast; 47.2 previously); Price index falls to 48.3 from 54.0; The employment index falls to 43.9 from 46.0
• US JOLTS job openings in August: 8.04 million (7.64 million expected, 7.71 million previously)
• SNB official Martin Schlegel noted that Swiss inflation is driven only by the services sector
• New Zealand’s GDT auction saw a 1.2% gain in dairy prices (previously 0.8%)

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, US 10 Year Yield, Bitcoin Overlay Chart by TradingView

Major asset classes started the day off in consolidation, likely due to thin liquidity during Asian market hours while Chinese banks were closed for the holiday. The downside risks became evident as the day went on as geopolitical tensions in the Middle East continued to escalate.

As it turned out, Iran responded with a missile attack on Israel following the latter’s ground invasion of southern Lebanon and in retaliation for the killing of Hezbollah leaders. Crude oil, which initially posted losses at the start of the session in London, rallied sharply later in the day as global supply concerns resurfaced.

Gold also benefited from safe-haven demand as the precious metal rose to close at $2,663.23 a troy ounce. On the other hand, US stocks succumbed to risk aversion, with the Dow down 200 points and the S&P and Nasdaq closing more than 1% lower, while the CBOE Volatility Index, aka Wall’s fear gauge Street, hit a high of 20 for the day.

Currency Market Behavior: US Dollar vs. Majors:

USD chart overlay against major currencies by TradingView

Price action also looked mixed on the currency scene as USD/JPY got off to a bullish start despite mostly positive economic releases from Japan. The kiwi also posted early losses against the greenback following mixed data from New Zealand.

Meanwhile, the Aussie grabbed some deals during the Asian trading session on upbeat retail sales data that indicated a stronger month-on-month consumer spending growth of 0.7% in August, compared to the previous increase of 0.1%.

USD/JPY soon gave back its gains towards the end of the Asian trading session, while AUD/USD also pulled back at the open. EUR/USD, which was already on shaky ground ahead of the region’s rapid CPI releases, posted more losses after the real numbers reflected a slowdown in price pressures, as expected.

Later, the US ISM manufacturing PMI report and JOLTS jobs data triggered a mixed reaction from the greenback as USD/JPY and USD/CHF continued their downward trajectory while higher yielding currencies (with except for the oil-linked loonie) continued to decline in risk.

Future potential catalysts for the economic calendar:

• Chinese banks still closed for holiday
• OPEC-JMMC meetings continue
• US ADP Non-Farm Labor Change at 12:30 GMT
• Speech by FOMC member Hammack at 13:00 GMT
• Speech by FOMC member Musalem at 14:05 GMT
• EIA crude oil stocks at 14:30 GMT
• Speech by FOMC member Bowman at 3:00 pm GMT
• Speech by FOMC member Barkin at 16:15 GMT

All eyes and ears may still be on US jobs indicators as traders prepare for the NFP release on Friday. For today, we have ADP Nonfarm Employment Change Report which is expected to show slightly higher employment growth for September.

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