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As of Wednesday's stock market close, the Dow Jones Index (US30) decreased by 0.98%. The S&P 500 Index (US500) lost 1.34%. The Nasdaq Technology Index (US100) closed yesterday negative by 1.63%. Stock indices are down due to the risk of an escalating war between Israel and Hamas after an explosion near a Gaza hospital complicated diplomatic efforts to contain the conflict. Following the blast, leaders from Jordan, Egypt, and the Palestinian Authority canceled scheduled summit meetings with President Biden, who landed in Israel yesterday. Hamas immediately blamed Israel for the bombing, but Israeli military authorities presented evidence that the explosion was caused by a mistaken Hamas rocket and not an Israeli aerial bombardment. In addition, the White House said today that the "current" US intelligence assessment is that Israel is "not responsible" for the bombing near a Gaza hospital based on "aerial imagery, intercepts, and open source information."

Airline stocks were under pressure yesterday after United Airlines Holdings (UAL) said profits would plummet if flights to and from Israel were suspended due to the conflict. As a result, UAL shares fell more than 8%. Morgan Stanley shares fell more than 7% after the company reported lower-than-expected third-quarter earnings from asset management. Nvidia (NVDA) was down by more than 3% yesterday after the company warned that new US restrictions on chip exports to China could hamper product development and cause other difficulties.

The US housing data had a mixed impact on stocks. US housing starts for September rose by 7.0% to 1.358 million units, weaker than expectations for a rise to 1.383 million units. Building permits for September fell by 4.4% to 1.473 million units.

Equity markets in Europe were mostly down on Wednesday. Germany's DAX (DE40) fell by 1.03%, France's CAC 40 (FR40) lost 0.91% yesterday, Spain's IBEX 35 (ES35) decreased by 0.94%, and the UK's FTSE 100 (UK100) closed negative 1.14%. Comments from a representative of the ECB Governing Council on Wednesday had a negative impact on the Euro when he stated that the conflict in the Middle East had shifted the balance against further ECB monetary tightening. With inflation in the region falling sharply, the ECB has likely ended its tightening cycle.

Crude oil prices rose more than 1% to a two-week high. Crude oil prices jumped after Iran's foreign minister called for an oil embargo against Israel.

Asian markets traded flat yesterday. Japan's Nikkei 225 (JP225) was little changed over yesterday, China's FTSE China A50 (CHA50) lost 0.19%, Hong Kong's Hang Seng (HK50) was down 0.23% by Wednesday's close, and Australia's ASX 200 (AU200) was positive 0.30% for the day.

The Bank of Japan is likely to discuss raising its inflation forecast for fiscal years 2023 and 2024 at its meeting later this month, extending the period for prices to reach or exceed the 2% target. The BoJ management believes the bank's forecast for a key measure of inflation - consumer prices excluding fresh food - will likely be revised upward to 2% or more for the year beginning in April. That's above July's forecast of 1.9% and would mean the Central Bank sees inflation at or above 2% for three consecutive years, which could fuel speculation of policy normalization.

Recent data on China's economy has set the government's growth target at around 5% and made it less likely that additional stimulus measures will have to be resorted to before the end of 2023. However, the ongoing housing crisis remains a major obstacle, clouding the outlook for next year. China's economic challenges come amid ongoing geopolitical tensions, with the US tightening restrictions on advanced technology and Europe testing the country's dominance in electric vehicle exports. Economists expect China's economic growth to slow to 4.5% in 2024.

• S&P 500 (F)(US500) 4,314.60 −58.60 (−1.34%)
• Dow Jones (US30) 33,665.08 −332.57 (−0.98%)
• DAX (DE40)  15,094.91 −156.78 (−1.03%)
• FTSE 100 (UK100) 7,588.00 −87.21 (−1.14%)
• USD Index  106.58 +0.33 (+0.31%)
   

News feed for 2023.10.19:

• Japan Trade Balance (m/m) at 02:50 (GMT+3);
• Australia Unemployment Rate (m/m) at 03:30 (GMT+3);
• Switzerland Trade Balance (m/m) at 09:00 (GMT+3);
• US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3);
• Canada Producer Price Index (m/m) at 15:30 (GMT+3);
• US Existing Home Sales (m/m) at 17:00 (GMT+3);
• US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• US Fed Chair Powell Speaks at 19:00 (GMT+3);
• US FOMC Member Bostic Speaks (m/m) at 23:00 (GMT+3).

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