​​​​​​​Global Stocks Rise Despite Middle East Tensions and Oil Price Decline | Daily Market Analysis

Key events: 

• USA - Building Permits
• USA - New Home Sales (Sep)
• Canada - BoC Interest Rate Decision
• USA - Crude Oil Inventories
• USA - Fed Chair Powell Speaks

Global stock markets posted gains on Tuesday, driven by positive corporate earnings that boosted investor risk appetite. However, caution lingered due to the ongoing Middle East conflict and pending critical data related to US interest rates.

Meanwhile, oil prices continued their decline as a series of weak economic indicators painted a bearish picture, raising concerns about potential impacts on oil demand. These worries took precedence over fears of the Israel-Hamas conflict escalating into a larger crisis in the oil-exporting region.

On Wall Street, major stock indices advanced on Tuesday, supported by optimistic forecasts from companies such as Verizon (NYSE: VZ) and Coca-Cola (NYSE: KO). These positive outlooks contributed to confidence in the health of corporate America, even in the face of a slowing economy and higher inflation.

Verizon's stock surged by 9.1% after the US wireless carrier raised its annual free cash flow forecast. General Electric (NYSE: GE) also saw a rise of 6.9% following the aircraft engine manufacturer's upward revision of its full-year profit forecast.

As for the major stock indices, the Dow Jones Industrial Average was up by 196.93 points, or 0.60%, at 33,133.34, the S&P 500 gained 21.71 points, or 0.51%, at 4,238.75, and the Nasdaq Composite saw an increase of 73.52 points, or 0.56%, at 13,091.84.

Of the 11 major S&P 500 sectors, ten were trading higher, with energy being the only exception, down 1.0%, due to weaker crude oil prices.

Investor attention this week is divided between earnings reports from high-profile companies like Microsoft (NASDAQ: MSFT), Facebook parent Meta Platforms (NASDAQ: META), and Amazon (NASDAQ: AMZN), and a slew of economic data releases leading up to the Fed's meeting from October 31 to November 1.

The Australian Dollar surged as a result of elevated inflation figures, notching its third consecutive day of trading on the rise by Wednesday. Furthermore, the AUD/USD pairing strengthened following the hawkish remarks made by Reserve Bank of Australia (RBA) Governor Michele Bullock on Tuesday.

On Wednesday, Australia's Bureau of Statistics (ABS) revealed that the Consumer Price Index (CPI) displayed growth during the third quarter of 2023, surpassing the prior increase observed in the second quarter. This upturn in inflation has raised the likelihood of a 25 basis points interest rate hike at the Reserve Bank of Australia (RBA) during its upcoming policy meeting scheduled for November 7.

Meanwhile, the US Dollar Index is in a consolidation phase, recovering from recent losses, partially buoyed by favorable preliminary S&P Global PMI data released from the United States on Tuesday. However, the decrease in US Treasury yields could exert downward pressure on the US Dollar.

US economic indicators have alleviated concerns about the potential negative impact of a more restrictive monetary policy and higher borrowing costs on investment and industrial activities.

The Gold price is building on its overnight bounce from the $1,954-1,953 region and gaining positive momentum during the Asian session on Wednesday. The non-yielding yellow metal seems to have paused its recent retracement from the vicinity of the $2,000 psychological mark, which it reached last Friday, benefiting from softer US Treasury bond yields.

Additionally, concerns of an impending economic downturn, intensified by weaker economic data from Europe on Tuesday, and the ongoing Middle East conflict, are driving a surge in demand for safe-haven assets like Gold. The precious metal has witnessed a remarkable 8% rally over the past two weeks, primarily due to fears that the Israel-Hamas conflict may spill over into other Middle Eastern nations, potentially impacting the global economy.

Traders are displaying caution and are taking a wait-and-see approach, perhaps in anticipation of Fed Chair Jerome Powell's speech later in the US session. Furthermore, the market's attention is firmly fixed on the impending release of the US Core PCE Price Index, which is the Federal Reserve's preferred gauge for measuring inflation and is scheduled for publication this Friday.