US equities fell on Friday in a risk off session with bond yields declining over rising geopolitical risks.
United States
The S&P500 fell -1.46% in broad-based selling with 91.5% of stocks lower and all sectors finishing in the red. The Nasdaq Composite also fell -1.62% along with the Russell 2000 -1.93% with the VIX surging 16.10% reflecting a risk-off mentality from investors. This comes after the dramatic escalation between Israel and Iran, with Iran directly launching missile attacks at Israel on the weekend. Geopolitical tensions distracted from the latest earnings reports from major financials, with JPMorgan and Wells Fargo both reporting net income which missed estimates amid rising funding costs.
In reaction, yields were lower across the curve with investors seeking safe-havens, with the 2-year yield down -6.3 basis points along with the 10-year by -6.6 basis points while the US dollar index climbed 0.72%, typically strengthening during crisis periods.
Aside from geopolitical tensions likely dominating investor focus this week, US retail sales for March are in focus tonight. This will be followed by the latest Canadian inflation data on Tuesday coupled with US home building permits. The week will then be rounded off with the latest leading index for March on Friday.
Europe
European equities were mixed on Friday, closing before geopolitical tensions escalated. The Euro Stoxx 600 edged up 0.14% along with the FTSE100 0.91%, while the DAX and CAC were -0.13% and 0.16% weaker. In economic data this week, the latest Eurozone industrial production data will be released tonight, followed by UK employment on Tuesday along with the latest economic sentiment surveys. UK inflation for March will follow on Wednesday expected to show headline prices rose 3.1% over the year to March and core prices rose 4.1%.
Australia
The ASX is expected to open lower this morning with ASX200 futures down -50 points or -0.64% to 7,772 on Friday, although given developments over the weekend, it would be unsurprising to see larger losses this morning. The index declined -0.33% on Friday with the majority of stocks and sectors lower. Ahead this week, the latest Chinese GDP data will be released on Tuesday, followed by New Zealand inflation for Q1 on Wednesday and the Westpac leading index for March. Australian employment will be the highlight of the week on Thursday, forecast to show 10k jobs were added in March, while the unemployment rate is expected to increase to 3.9% from 3.7% previously.
Commodities
Oil prices finished higher on Friday, driven by tensions in the Middle East with both WTI and Brent crude up 0.75% and 0.79% respectively. Iron ore prices climbed 2.61% on Friday although are -0.53% lower this morning at US$110.45 while copper edged up 0.13% on Friday. Despite being a typical safe haven, gold declined -1.19% on Friday to US$2,344 an oz along with silver -1.99% and Bitcoin -4.8%.
Economic Calendar
US Retail Sales (MoM Mar) 22:30
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
