Australia

Australian shares are set to rise at market open following a positive day on Wall Street, with all three major indices higher.

ASX futures were up 0.7% or 48 points as of 8:00am on Tuesday, suggesting a higher open.

US stocks climbed Monday, reflecting investors' hopes that the Israel-Hamas conflict wouldn't have a major impact on the global economy.

While conditions remained tense in the Middle East, investors expressed some relief that the conflict had yet to escalate into an even worse geopolitical crisis. Investors had piled into safer assets on Friday as a hedge against unexpected shocks over the weekend.

The tech-heavy Nasdaq Composite rebounded from a 1.2% decline on Friday, by adding back 1.2%. The S&P 500 rose 1.1%, and the Dow Jones Industrial Average gained 314 points, or 0.9%.

At the other end of the reversal, Monday was more challenging for assets such as gold and US Treasurys, which had rallied Friday.

In commodity markets, Brent crude oil fell 0.8% to US$90.13 a barrel while gold was lower at US$1,920.20.

In local bond markets, the yield on Australian 2 Year government bonds was higher at 4.03% while the 10 Year yield was flat at 4.46%. US Treasury notes were higher, with the 2 Year yield at 5.10% and the 10 Year yield at 4.71%.

The Australian dollar hit 63.42 US cents up from the previous close of 62.95. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 100.31.

Asia

Chinese stocks closed lower as semiconductor shares weighed. The declines came amid a Bloomberg report saying that the US could further restrict China's access to advanced chip tech. Semiconductor Manufacturing International Corp. lost 2.7% and LONGi Green shed 1.75%. Consumer services stocks were also broadly lower, with China Tourism Group Duty Free losing 2.4%. Concerns about the economy also lingered. Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note that Beijing not only lacks a convincing plan to offset the persistent drag from the property sector drag, it faces mounting challenges from credit constraints, falling confidence and capital outflows. Energy stocks rose on surging oil prices, with PetroChina up 1.7%. The benchmark Shanghai Composite Index fell 0.5% to 3073.81, the Shenzhen Composite Index lost 1.1% and the tech-heavy ChiNext Price Index slid 2.0%.

Hong Kong shares closed lower, dragged down by consumer and tech stocks. The benchmark Hang Seng Index dropped 1.0% at 17640.36 and the Hang Seng Tech Index lost 1.8%, following most regional equities markets lower. Geopolitical tensions in the Middle East spurred risk-off sentiment in markets, starting the week on a cautious note, HSBC Global Research analysts wrote. Investors are also awaiting key China economic data due Wednesday, including GDP and industrial output. Consumer and tech stocks led the losses as Tingyi (Cayman Islands) dropped 4.9% and Haidilao International shed 4.2%. Li Ning lost 3.7% and JD Health dropped 3.5%, continuing last week's declines. Energy stocks rose amid higher oil prices. ENN Energy added 1.5% and China Shenhua Energy gained 1.4%.

Japanese stocks ended lower, dragged by falls in electronics and tech stocks as concerns persist about a possible escalation of the conflict in the Middle East. Advantest fell 4.8% and M3 shed 3.6%. The Nikkei Stock Average dropped 2.0% to 31659.03. Investors are focused on the latest developments from the war between Israel and Hamas, as well as their impact on crude-oil prices and US Treasury yields. USD/JPY is at 149.50, compared with 149.55 late Friday in New York. The 10-year Japanese government bond yield falls 1 basis point to 0.750%.

Indian shares closed lower slightly, dragged by bank stocks. The benchmark Sensex fell 0.2% to 66166.93, following most regional equity markets lower amid broad risk-off sentiment. Markets will likely react to fears of escalating tensions in the Middle East and reports that the US will tighten curbs on China's access to advanced chipmaking, Charu Chanana, a market strategist from Saxo Markets, says in a note. Lenders were among the worst performers, with IndusInd Bank and Kotak Mahindra Bank losing 1.1% and 0.8%, respectively. Tata Consultancy Services fell 1.3%. Meanwhile, JSW Steel rose 1.7% and Tata Steel was 1.6% higher.

Europe

The Stoxx Europe 600 gained 0.2%, and the DAX and CAC 40 advanced 0.3%, with most other European indices also climbing. Polish stocks rose after liberal pro-EU opposition parties emerged as favorites to form Poland's next government. "European markets have started the week cautiously higher in the absence of an escalation of tensions [in the Middle East] over the weekend, although you can be sure investors will be keeping a wary eye on events as Israel weighs its next move," CMC Markets analyst Michael Hewson writes.

The FTSE 100 index closed up 0.4% to 7630 points, in line with global markets as the absence of an escalation of tensions in the Middle East left investors positively cautious, CMC Markets U.K. chief market analyst Michael Hewson says in a note. The bluechip index's positive performance was helped by resilience in basic resources and energy, with Shell stock reaching a new record high at 2,750.50 pence. Wealth manager St. Jame's Place shares closed up 5% and led the top performers, rebounding from Friday's drop amid concerns over the impact of the new consumer duty rules on its business model, Hewson adds. Next PLC and Hargreaves Lansdown also outperformed, closing up 3.4% and 3.0% respectively. On the opposite side, Ocado shares slipped 5.8% after being downgraded by Barclays.

North America

US stocks climbed Monday, reflecting investors' hopes that the Israel-Hamas conflict wouldn't have a major impact on the global economy.

While conditions remained tense in the Middle East, investors expressed some relief that the conflict had yet to escalate into an even worse geopolitical crisis. Investors had piled into safer assets on Friday as a hedge against unexpected shocks over the weekend.

The tech-heavy Nasdaq Composite rebounded from a 1.2% decline on Friday, by adding back 1.2%. The S&P 500 rose 1.1%, and the Dow Jones Industrial Average gained 314 points, or 0.9%.

At the other end of the reversal, Monday was more challenging for assets such as gold and US Treasurys, which had rallied Friday.

Gold for October delivery slipped 0.3% to $1,921.10 a troy ounce after climbing 3.1% Friday, its largest one-day gain since December 2022. Bond prices also fell, pushing the yield on the 10-year US Treasury note up to 4.709% from 4.628% Friday.

One concern for investors is that an anticipated Israeli ground invasion of Gaza, aimed at destroying Hamas, might draw in Hamas ally Iran, leading to stricter sanctions on Iran oil exports and higher energy prices.

Still, the conflict hasn't yet led to a big jump in oil prices. Brent crude, the global benchmark, slumped 1.4% to $89.65 a barrel Monday.

"Today is kind of an unwinding of [the] flight-to-safety trade late last week," said Will Compernolle, macro strategist at FHN Financial. Even so, he added, "the war in Israel is obviously a huge new risk with a ton of potential outcomes."

Monday's gains were spread out among stocks, with no sector in the S&P 500 rising less than 0.7%.

Pfizer shares gained 3.6% after the pharma giant slashed its 2023 revenue-guidance range, citing lower-than-expected sales of both its treatment and its vaccine for Covid-19 but also announced cost-cutting measures meant to save at least $3.5 billion through the end of 2024. The news weighed on other vaccine makers, with Moderna falling 6.5% and Novavax dropping 6%.

Lululemon Athletica's stock surged 10%, two days before it will join the S&P 500 index. Charles Schwab gained 4.7% after the brokerage firm said in an earnings report that bank-deposit outflows were slowing.

Some analysts noted that optimism about the US economy might help to offset investors' concerns about geopolitical tensions.

In recent weeks, some Federal Reserve officials who had previously seemed more inclined to raise interest rates one more time this year have indicated that such action might not be necessary thanks to the recent increase in longer-term US Treasury yields.

Federal-funds futures, used by traders to bet on the direction of interest rates, showed Monday that traders saw only a 33% chance that the Fed will raise rates again this year, down from nearly 50% earlier in the month, according to CME Group data.

Meanwhile, the economy appears to be on solid footing, with the Atlanta Fed's GDP tracker's estimate of third-quarter economic growth currently at a robust 5.1%.

That number will be updated on Tuesday after the government releases new retail-sales data. Economists surveyed by The Wall Street Journal expect overall sales to have increased 0.3% in September, down from 0.6% the previous month.