U.S. stock index futures experienced a slight decline after ADP employment data for September surpassed expectations. Concerns are growing over potential escalations in Middle East tensions following Iran's significant military strike on Israel. Globally, stock markets showed mild volatility while bonds remained stable. Oil prices surged, and gold hovered near record highs.
At the time of reporting, Dow Jones futures were down 0.21%, S&P 500 futures fell 0.17%, and Nasdaq futures dipped 0.09%. In Europe, Germany's DAX index dropped 0.32%, the UK's FTSE 100 rose 0.18%, France's CAC 40 edged up 0.01%, and the Euro Stoxx 50 index decreased 0.06%.
WTI crude oil prices jumped 3.34% to $72.16 per barrel, while Brent crude oil increased 3.07% to $75.82 per barrel.
The U.S. ADP employment report showed an addition of 143,000 jobs in September, exceeding the expected 120,000. This growth indicates a rebound in the job market after five months of slowing growth, despite the lowest figures since March 2023 recorded last month. However, the three-month average growth fell to 119,000, one of the lowest since 2020.
Iran declared the end of its missile attacks on Israel unless further provoked, while Israel and the United States pledged retaliation. Market sentiment is tense, fearing a larger-scale war. The potential destruction or disruption of Iran’s oil facilities could happen, significantly impacting oil prices.
Amidst the escalating tensions, Israel deployed infantry and armored units to southern Lebanon to counter Hezbollah forces supported by Iran. The UN Security Council is set to discuss Middle East issues, and the EU has called for an immediate ceasefire.
On Wall Street, the VIX volatility index reached critical levels, indicating possible increased market volatility. Despite the geopolitical tension, the macroeconomic outlook remains a primary focus for investors.
Economic indicators released continue to show robust performance, though the Federal Reserve Chair delayed a significant interest rate cut. Job openings unexpectedly increased in August, and worries about a potential port strike loom, potentially causing substantial economic losses.
The East Coast and Gulf Coast port workers began a significant strike, the largest in nearly 50 years, halting around half of the nation's maritime cargo. The strike could result in billions of dollars in daily economic losses and exacerbate inflation.
On the stock front, Nike (NKE) was down over 5% in pre-market trading due to risks from the East Coast port strike. JP Morgan revised Nike's target price to $77 from $80.
Chinese stocks surged in pre-market trading, with XPeng (XPEV) up over 10%, Li Auto (LI) up over 9%, NIO (NIO) up over 7%, and Alibaba (BABA, Financial) up nearly 5%. A report from S3 Partners indicated that the sharp rise in Chinese stocks driven by stimulus policies has resulted in significant losses for short-sellers, particularly in stocks like Alibaba and JD.com (JD).
