Daily Market Commentary 2nd October 2024

The drums of war were beating overnight, as the Iranian Government launched missile attacks on Israel, expanding the war in the Middle East. The war between Israel and Gaza has now expanded to include Lebanon, Yemen and now the powerful Iranians. This is a sharp escalation and is a serious threat to global markets. Gold and the US Dollar both jumped higher, as did oil prices. If this were to continue to expand markets would really start to suffer Geo-Political consequences. EU inflation followed the German number, to 1.8%, well withing the target zone. This will add further pressure onto the ECB to make further rate cuts. Instability and uncertainty sent equities lower, and currencies also suffered the safety flows to the US Dollar. The EUR fell to 1.1070, while the GBP plummeted to 1.3270.

Commodity currencies were not immune to the rising reserve, with the AUD falling back below 0.6900, while the NZD crashed back under 0.6300. The US Jolts report was stronger than expected and economic data in the US and Europe are showing green shoots, but war will overwhelm this positive news.