US stocks bounce back amid Israel-Hamas conflict escalation

Stocks staged a comeback Monday as investors shook off pressures driven by the deadly Israel-Hamas conflict.

The Dow Jones Industrial Average was higher by 0.6 per cent, or 185 points. The S&P 500 was also higher by 0.6 per cent, meanwhile, and the tech-heavy Nasdaq Composite added 0.4 per cent.

The major indexes were down across the board earlier in the day. At session lows, the Dow had shed 153.89 points, while the S&P 500 lost 0.6 per cent. The Nasdaq pulled back as much as 1.15 per cent before recovering.

Stocks were under pressure earlier on Monday after the Israeli-Palestinian conflict escalated Saturday, with militant group Hamas staging an invasion, to which Israel was seemingly caught off guard. More than 700 Israelis have been killed in Hamas attack, with at least 560 Palestinians killed in retaliatory Israeli strikes on the Gaza Strip, according to latest figures. The attack led Israeli Prime Minister to declare his country is at war.

The rising geopolitical tensions caused by the conflict could have ramifications for the energy market, with some experts forecasting a brief surge in crude prices but overall limited impact. The rising tension could also serve to stoke further volatility in market that has kept traders worried with persistent inflation and higher interest rates.

WTI crude oil futures were up 4.24 per cent on Monday, trading above $86 per barrel. International Brent futures rose 4.2 per cent to $88.14. Major defence and oil companies jumped amid the conflict, with Lockheed Martin and Northrop Grumman Corp adding 8.5 per cent and 11.3 per cent, respectively. Marathon Oil and Exxon Mobil, meanwhile, climbed 7.2 per cent and 3.6 per cent, respectively.

Some investors expressed confidence that the market had already assessed the impact of Hamas’ attack over the weekend.

Small caps rose on Monday, boosting confidence about the broader economy. The Russell 2000 index of small-cap companies added 0.8 per cent, while the S&P Small Cap 600 index climbed more than 1 per cent.

Federal Reserve vice chairman Philip Jefferson said he is watching the increase in Treasury yields as a potential further restraint on the economy even though the rate of inflation remains too high.

The bond market was closed Monday for Columbus Day, meaning Wall Street will have to wait until tonight for an update on interest rates.

Investors are also looking ahead to this week’s earnings reports as further signals about the health of the broader economy. Companies reporting this week include PepsiCo, Walgreens Boots Alliance, JPMorgan and BlackRock.

Overall, all US sectors closed higher overnight. Energy was the best performer, closing over 3 per cent higher. Financials recorded the fewest gains.

Futures

The SPI futures are pointing to a 0.4 per cent gain.

Currency

One Australian dollar at 7:40 AM was buying 64.09 US cents.

Commodities

Gold added 1.63 per cent. Silver was up 1.37 per cent. Copper gained 0.88 per cent. Oil jumped 4.23 per cent.

Figures around the globe

European markets closed lower. London’s FTSE shed 0.03 per cent, Frankfurt lost 0.67 per cent, and Paris closed 0.55 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng gained 0.18 per cent while China’s Shanghai Composite closed 0.44 per cent lower.

The Australian share market closed 0.23 per cent higher at 6,970.16.

Ex-dividends

CD Pvt Equity Fund III (ASX:CD3) is paying 3 cents unfranked
Reece Limited (ASX:REH) is paying 17 cents fully franked
Turners Automotive (ASX:TRA) is paying 5.5416 cents 85 per cent franked

Dividends payable

Chorus Ltd (ASX:CNU)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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