FX168 Financial News (Europe) News After Israel's counterattack against Iran did not affect oil facilities, the market was slightly relieved. Global stock markets rose on Monday (10/28), crude oil prices fell, and stocks rose at the beginning of a critical investment week. The “Big Seven Tech Giants” will release earnings reports this week, while Japan is mired in political turmoil due to elections, and the yen is falling.

The easing of the situation in the Middle East has seriously reduced oil prices

The weekend allayed market concerns about the escalating conflict in the Middle East. Israel shunned oil and nuclear facilities during Saturday's retaliatory attacks on Iran and concentrated only on military facilities.

Israel's response to Iran's missile attack on October 1 is currently focused on missile factories and other military facilities near Tehran, rather than oil refineries or nuclear facilities. Iran said the oil industry was operating normally after Israel attacked military targets across the country. This has eased some geopolitical tension. The market is also preparing for a week full of corporate earnings reports and important economic data, and the US presidential election is gradually approaching.

“Israel's restrained response strengthens the hope that the situation in the Middle East will cool down,” Warren Patterson, head of commodity strategy at the Dutch International Group in Singapore, said in the report. “If the situation actually shows signs of cooling down, this will cause fundamental factors to once again dominate price trends.”

US and Burundian oil both plummeted 6% during the day, and are now reported at $67.03 per barrel and $70.98 per barrel, respectively. Before dawn on Saturday, dozens of Israeli fighter jets completed three waves of air strikes, hitting missile factories and other locations near Tehran and western Iran.

Commonwealth Bank of Australia analyst Vivek Dhar believes that the conflict in the Middle East is unlikely to cool down quickly. Despite Israel's low-intensity response to Iran, he said in a report that he still doesn't think Israel and Iran's proxies (Hamas and Hezbollah) will achieve a lasting cease-fire.

The price of gold has also declined. Currently, it is hovering around 2,730 US dollars, which is slightly lower than the historical high set last week. The Israeli shekel became the biggest appreciation of the approximately 150 currencies tracked by Bloomberg.

European and American stock markets rebounded

US stock futures showed a rebound trend on Wall Street. The S&P 500 index recorded a weekly decline for the first time in seven weeks last week. Airlines became the main winners in pre-market deals as fuel costs were linked to oil prices, while energy stocks declined. Boeing fell after Bloomberg reported that it plans to raise capital.

The pan-European Stoxx 600 index rose slightly. Luxury stocks such as LVMH and Hermes led the way, while energy giants Shell, Total Energy, and British Petroleum dragged down the index.

In terms of individual European stocks, Sonova Holding AG's shares rose more than 5% as the Zurich State Bank said Costco would resume selling the company's Sennheiser hearing aids. Royal Dutch Philips shares fell 17% as it lowered sales expectations. German Porsche shares fell after reporting lower profits than analysts' expectations.

Britain's FTSE 100 did not perform well, after Prime Minister Kiel Stammer said his administration would raise taxes and increase borrowing in Wednesday's key budget to meet the challenge of “fiscal reality.”

“We continue to see strong investor interest in stocks — they are excited about the global cycle of interest rate cuts while corporate profits remain positive.” Marija Veitmane, senior multi-asset strategist at State Street Global Markets, said, “The Middle East conflict has not escalated, and the drop in oil prices has helped.”

The Chinese stock market declined slightly, as industrial companies' profits fell sharply in September, and deflationary pressure challenged corporate financial conditions. Meanwhile, China's central bank has launched a new tool to help better manage liquidity.

The yen plummeted

The 10-year US Treasury yield rose about four basis points to 4.28%, and the dollar index remained stable.

The yen fell to its lowest level against the US dollar in about three months. Prime Minister Ishiwari Shigeru's earlier decision to hold an early general election was counterproductive. The weakening yen contributed to Japan's export-oriented economic development and boosted the Tokyo Stock Exchange Index by 1.8%.

After the Liberal Democratic Party showed its weakest election results since 2009, the Liberal Democratic Party and its coalition partner, the Komeito Party won 215 seats in the lower house in Sunday's election, far below the 233 majority requirement.

The yen weakened sharply, and the dollar rose as much as 1% in early trading as investors believed that the government might ease economic policies in the future.

Bob Savage, head of market strategy and insight at BNY, said: “The market may think this means that the yen is facing more trouble. 155 is the first target, while [the Ministry of Finance] may have an intervention line at 160.”

Nomura analyst Yusuke Miyairi also expects the Bank of Japan to be more moderate in Thursday's policy evaluation, which will put pressure on the yen.

The broader money market remained stable, and the dollar experienced its biggest monthly gain in two and a half years in October, as signs of a strong US economy and the prospect of President Trump's re-election boosted US yields.

The market has recently begun pricing Trump's second term, but recent Reuters/Ipsos polls show that Vice President Kamala Harris is slightly ahead of Trump by 46% to 43%.

This month's benchmark 10-year Treasury yield rose by nearly 45 basis points, partly because Trump's chances of winning the election have increased, but US data shows that the economy is resilient, so interest rates may not fall as rapidly as predicted a few weeks ago. Friday's monthly employment report may further reinforce this view.

In Europe, Eurozone government bond yields rose slightly in line with US Treasury bonds. The yield on French 10-year treasury bonds remained roughly stable at 3.05%, unaffected by rating agency Moody's's downturn in France's sovereign debt outlook on Friday.

This week's important events

As the US presidential election approaches, and employment data released on Friday, investors remain cautious about stocks and bonds and are unwilling to push them to the extreme.

The financial reports of five of the “Big Seven Tech Giants” to be released this week are expected to show the slowest collective quarterly profit growth in six quarters. The five companies that will release earnings this week are Google's parent company Alphabet, Microsoft, Facebook's parent company Meta, Apple, and Amazon.

Furthermore, economic growth data and non-farm payrolls reports for the Eurozone and the US will be released soon. Meanwhile, the US presidential election is scheduled for November 5.

Jim Reid, strategist at Deutsche Bank, said: “This week's series of data releases will test market sentiment, including Friday's US employment data and earnings release, including five of the 'Big Seven Tech Giants'. At the same time, the tense US election has also entered its final stage.”

The next few days are critical for the US bond market. The Treasury Department will announce the scale of its debt issuance on Wednesday, which will have a profound impact on the market.

Michael Brown, senior research strategist at Pepperstone Group Ltd, said: “The market has already begun to digest some emergencies that need to be handled immediately this Monday, and then consider risk events hanging over the market like 'Mount Everest'.”