Another positive upside for equities is Monday’s 4% rise in crude oil prices, which sparked a rally in energy stocks. In addition, the surprise Hamas attack on Israel over the weekend contributed to a rally in defense stocks.

On Monday, the Bank of Israel announced its intention to sell up to $30 billion in foreign exchange reserves to support its national currency, which has fallen sharply since the weekend incursion by Hamas militants. The Israeli shekel traded at 3.90 against the US dollar yesterday, the weakest in seven years.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) decreased by 0.67%, France’s CAC 40 (FR40) fell by 0.55% on Monday, Spain’s IBEX 35 (ES35) lost 0.91% and the UK’s FTSE 100 (UK100) closed down by 0.03%. German industrial production for August fell by 0.2% m/m, weaker than expectations of 0.1% m/m.

Hamas’ attack on Israel drove crude oil prices up over 4% amid concerns that the conflict could widen and jeopardize Middle East oil supplies. The US has sent a group of warships to the eastern Mediterranean. The Wall Street Journal reports that Iranian intelligence services helped Hamas plan Saturday’s surprise attack, raising the risk of retaliation against Iran.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) was not trading yesterday, China’s FTSE China A50 (CHA50) decreased by 0.69%, Hong Kong’s Hang Seng (HK50) added 0.18%, and Australia’s ASX 200 (AU200) ended the day positive by 0.23%.

Japan is unlikely to try to reverse the yen’s downtrend through currency intervention as the currency’s fall reflects real economic fundamentals, former chief currency diplomat Naoyuki Shinohara said yesterday. Shinohara said there are no set rules or general agreement among the G7 advanced economies on what currency movements are defined as “excessive volatility” that justifies intervention. The remarks contrast with the views of current chief foreign exchange diplomat Masato Kanda, who said last week that a sustained fall in the yen over a long period could be grounds for intervention.

S&P 500 (F)(US500) 4,335.66 +27.16 (+0.63%)

Dow Jones (US30) 33,604.65 +197.07 (+0.59%)

DAX (DE40)  15,128.11 −101.66 (−0.67%)

FTSE 100 (UK100) 7,492.21 −2.37 (−0.032%)

USD Index  106.09 +0.05 (+0.04%)

• – Australia NAB Business Confidence (m/m) at 03:30 (GMT+3);
• – Norway Consumer Price Index (m/m) at 09:00 (GMT+3);
• – UK FPC Meeting Minutes at 12:30 (GMT+3);
• – US FOMC Member Bostic Speaks at 16:30 (GMT+3);
• – US FOMC Member Kashkari Speaks at 22:00 (GMT+3).