Risk sentiment improved yesterday as news that President Biden will visit Israel spread. The stock market gained while the US Dollar weakened and the WTI oil price fell. Bitcoin also shot up yesterday on rumours that BlackRock would apply for an exchange-traded fund that invests directly in the cryptocurrency, but then fell on later statements.
News of efforts to prevent the war from spreading calmed investors
In response to diplomatic efforts to stop the conflict between Israel and Hamas from spreading to other countries, investor risk sentiment improved on Monday.
The United States, through its Secretary of State Anthony Blinken who is in Israel, is intervening to avoid an escalation of tension that could lead Middle Eastern countries to war. President Biden is likely to travel to Israel in the coming days and negotiations for humanitarian aid to enter Gaza across the Egyptian border are moving forward. All of this without the Israeli armed forces having yet set foot in the Gaza Strip. Fears that this action may take place are very high as it would lead to Iran's involvement in the conflict.
Even while uncertainty is still high and tension remains, as time passes the situation in the financial markets could gradually improve.
Stock market gains in wait for big bank reports
In this slightly more optimistic scenario, the stock market rose yesterday, and the US Dollar weakened. Bond purchases in search of refuge came to an end and the yields of North American bonds rose with the 10-year bond gaining 10 basis points.
As investors get ready for several earnings announcements over the coming few days, the S&P 500 stopped its downward trend from the previous two days. Two of the large North American banks, Bank of America and Goldman Sachs, will report today. Johnson & Johnson is also set to report. The stock market has performed well during earnings seasons lately, so this time it might also be favourable for the market.
Price of WTI oil fell and Bitcoin shot up on BlackRock news
WTI oil fell by around one Dollar yesterday due to the apparent improvement in the situation in Israel, but we are still far from an end to the hostilities. Tension could also become worse, making a rebound a possibility and crude oil bullish. Some industry analysts have kept their price forecast above $100.
Yesterday saw an unusual shift in the price of the Bitcoin cryptocurrency. It originally surged and gained 10% on the news that BlackRock planned to submit an application for an exchange-traded fund that would make direct investments in the digital currency.
However, a decline in the cryptocurrency followed BlackRock's remark that this idea was still being studied, wiping out the gains.
In any case, if the biggest fund manager in the world ultimately agrees to engage in this cryptocurrency, an interesting possibility of Bitcoin development could open up.
Bitcoin monthly chart, October 17, 2023. Source: CAPEX.com WebTrader.
Key Takeaways
- Investor risk sentiment improved as efforts are being made to prevent the Israel – Hamas war from spreading.
- President Biden is expected to visit Israel, which may help the situation in the market to further improve.
- The stock market rose yesterday, the Dollar weakened, and bond purchases ceased.
- The S&P 500 stopped falling after two days.
- Goldman Sachs and Bank of America will release their earnings reports today.
- The WTI oil price fell by around one Dollar yesterday.
- Bitcoin gained 10% yesterday on news about BlackRock’s exchange-traded but fell after more statements were released.
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Sources: Bloomberg, Reuters
