On Friday, the Dow Jones (US30) Index gained 0.81% (for the week +0.15%), while the S&P 500 (US500) Index gained 0.90% (for the week +0.43%). The NASDAQ Technology Index (US100) closed positive 1.22% (for the week +0.38%). Stocks rose on Friday as a stronger-than-expected US September Payrolls report bolstered prospects for a soft landing. However, the prospect of escalating conflict in the Middle East is dampening investor appetite for risk assets and is a negative for equities. Markets are awaiting Israel’s response to Tuesday’s rocket attack on Iran after Israeli Prime Minister Netanyahu vowed to retaliate, saying Iran “made a big mistake” and will “pay.”

The US Nonfarm Payrolls for September rose by 254,000, indicating a stronger labor market than expected 150,000 and the largest increase in 6 months. The unemployment rate for September unexpectedly fell by 0.1 to 4.1%, showing a stronger labor market than expectations of no change at 4.2%. Average hourly earnings for September rose by 0.4% m/m and 4.0% y/y, stronger than expectations of 0.3% m/m and 3.8% y/y. Markets discount the odds of a 25bp rate cut at the November 6–7 FOMC meeting to 100% and a 50bp rate cut at this meeting to 6%.

Equity markets in Europe rallied strongly on Friday, but all major indices closed negative at the end of the week. The German DAX (DE40) rose 0.55% (for the week -1.50%), the French CAC 40 (FR40) closed higher by 0.85% (for the week -2.67%), the Spanish IBEX 35 (ES35) gained 0.35% (for the week -2.26%), the British FTSE 100 (UK100) closed down 0.02% (for the week -0.48%).

French Industrial Production rose 1.4% m/m in August, beating expectations of 0.3% m/m and the largest increase in 15 months. ECB Governing Council spokesman Centeno said on Friday that Eurozone labor market dynamics had cooled slightly, and inflation is very close to 2%, hinting at further rate cuts by the ECB. Swaps discount the odds of a 25bp ECB rate cut at the October 17 meeting to 90%.

WTI crude oil prices rose by 0.9% to close at $74.4 per barrel on Friday, the highest level in five weeks, amid concerns over possible supply disruptions in the Middle East. Concerns intensified after Biden refrained from directly condemning a potential Israeli strike on Iran’s oil facilities. Tel Aviv vowed this week to retaliate against Iran while ramping up operations in Beirut amid the ongoing conflict with Hezbollah. Meanwhile, OPEC’s spare production capacity and stability in global oil supplies eased supply concerns.

Asian markets traded flat last week. Japan’s Nikkei 225 (JP225) was down 1.23%, China’s FTSE China A50 (CHA50) did not trade last week due to holidays, Hong Kong’s Hang Seng (HK50) was up 11.20%, and Australia’s ASX 200 (AU200) was negative 0.76%.

Vietnam’s annual inflation rate fell to 2.63% y/y in September 2024 from 3.45% y/y in August, the lowest since July 2023 after a super typhoon hit the country earlier this month. Prices fell in several categories, including housing. Annual core inflation, which excludes volatile items, remained relatively stable (2.54% vs. 2.53%), close to the lowest level since August 2022. Vietnam’s GDP growth hit a 2-year high in the third quarter. Vietnam’s GDP grew 7.40% year-on-year in Q3 2024, accelerating from an upwardly revised 7.09% growth in Q2, the sharpest increase since Q3 2022.

Australia’s trade surplus in goods in August 2024 was A$5.64 billion. This was the largest trade surplus since April despite a small decline in both exports and imports.

Japan’s Index of leading economic indicators, which is used to gauge the economic outlook several months ahead on data such as job offers and consumer sentiment, fell to 106.7 in August 2024 from a final reading of 109.3 in the previous month, falling short of market estimates of 107.4.