- U.S. indexes open session with declines; Wall Street worries about rising oil prices; US100 loses 1.1%, US500 0.8%, and US30 0.7%
- VIX 'fear' index gains nearly 6%; mixed macro data from US; stronger-than-forecast JOLTS report (vacancies), weaker ISM manufacturing sector (very strong decline in price sub-index)
- Israeli IDF spokesperson has so far not confirmed any missile attacks from Iran
- Apple shares fall nearly 3% and lead in 'large-cap' declines; maritime carrier ZIM loses nearly 7%
- U.S. equity market gains dominate oil producer sector; Occidental Petroleum (OXY.US) gains 2%
Today's equity market sentiment was mixed at the start of the European session, but a stronger downward impulse emerged after reports from a White House spokesman, quoted by Bloomberg and Axios, indicated that Iran was preparing for an immediate missile response, toward Israel, which launched a limited ground military operation in Lebanon yesterday and escalated tensions in Syria.
Higher oil prices could put a sizable question mark over the soft landing of the economy that Powell is communicating, and potentially lead to a renewed 'cautious' Fed policy. Such a scenario would again mean tighter Fed messaging and caution about pursuing an 'aggressive cycle of rate cuts,' and thus increase the market's valuation of the chances of a recession in the US economy. Macro data came out mixed; JOLTS suggests a still robust labor market, while ISM manufacturing suggests weakness in the sector and a strong decline in prices.
Source: xStation5
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Contracts on the Nasdaq 100 (US100) are trading nearly 1.5% oversold today, and are testing the 71.6 Fibonacci retracement of the upward wave initiated just after the last contract roll-up. At the same time, this is the strongest downward impulse since September, and the bears managed to push the benchmark below 20,000 points, suggesting a short-term supply advantage. The RSI on the 15-minute interval indicates 12 points, suggesting an extreme oversold level, at current levels. It appears that the index may nervously continue to react, in the scenario of an actual missile response from Iran, which is responsible for oil production of 3.3 million barrels per day and exports of about 1.5 million barrels; mainly supplying China.
Source: xStation5
News from the companies
- ZIM Integrated Shipping (ZIM.US) and other ocean freight companies are trading down, as dockworkers have abandoned all major ports on the U.S. East Coast and Gulf of Mexico, amid an ongoing strike; potentially crippling part of the transatlantic container ship fleet. FedEx (FDX.US) and UPS (UPS.US) are down 2 and 3 percent today, respectively, although analysts at Stifel indicated yesterday that they would benefit most from delays in the aforementioned strike. The US Port strikes could cost the US between $3 to $5 billion per day, according to CNBC estimations.
Macro data
US ISM Manufacturing (September): 47.2 vs. 47.5 expected and 47.2 previously, the largest drop in the price sub-index since May 2023 (from 54 to 48.3, 53.5 expected)
- Labor market sub-index: 43.9 (previous: 46)
- New orders: 46.1 (previous: 44.6)
JOLTS report: 8.04 million (expected: 7.673 million; previous: 7.711 million)
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