Market is resilient in face of geopolitcal uncertainty - Creand
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Market is resilient in face of geopolitcal uncertainty

Investors entered last week trying to digest news of a new conflict brewing in the Middle East. The potential for a wider regional clash weighed on investor sentiment. Additionally, inflation data in the US was somewhat worse than expected. These factors made it a bit surprising that the S&P 500 managed to eke out a gain of 0.5% for the week although the Nasdaq did close lower by 0.2%.

A decline in Treasury yields and some technical buying interest related to the idea that the market was oversold were likely contributors to the market’s resiliency. The yield on the 10-year Treasury Note fell with the help of safe-haven seeking buys. The 2-yr note yield fell one basis point this week to 5.05%, but the 10-yr note yield declined 15 basis points to 4.63%.

The CPI increased 0.4% month-over-month in September (consensus 0.3%) and core CPI, which excludes food and energy, rose 0.3% (consensus 0.3%). More than half of the increase in total CPI was driven by a 0.6% increase in the index for shelter. On a year-over-year basis, total CPI was unchanged at 3.7% while core CPI dropped to 4.1% from 4.3%. The CPI excluding shelter was up just 2.0% year-over-year and the services index less rent of shelter was up 2.8% year-over-year.

As a byproduct of the conflict in the Middle East, the price of crude oil was on the rise. WTI crude oil futures jumped 6.0% to end the week at $87.80 barrel. Eight of the S&P 500 sectors registered a gain with energy (+4.5%) leading by a wide margin. The consumer discretionary sector (-0.7%) saw the largest decline. Earnings season kicked off this week with generally good results, highlighted by JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), and UnitedHealth (UNH).