uploaded image

Investors Flock to Safe Havens as Conflict Continues: Gold and Bonds Surge Amid Uncertainty

By:JJ Kinahan

Bonds and equities extend rally, CEO appointments, earnings reports and Exxon's acquisition deal

  • Markets prove to be resilient, extending the rally amid global tensions. Bonds surge, oil prices retreat and the VIX contracts.
  • Safe havens like bonds and gold see increased investor interest; watch for bond reactions to PPI.
  • Individual stock news that's shaping stock market dynamics includes CEO appointments, earnings releases and acquisitions,.

As markets continue their rally amid global tensions, this overview delves into the recent performance of equities, bonds and oil, while highlighting key developments in individual stocks.

The rally that commenced last Friday continued through yesterday, with the S&P 500 gaining 0.5%. Notably, 10 of the 11 sectors were higher on the day, signifying broad-based strength.

The Nasdaq Composite also followed suit, closing higher by 0.6%. Bonds joined the rally, marking their best performance since August. In premarket trading, both the S&P 500 and Nasdaq Composite have gained just under 0.5%, while bonds surged over 1.3%, driving the yield on the 10-year note to a two-week low.

Oil prices retreat

In recent days, oil prices have taken a step back, dropping from highs of $95 per barrel to close at $85.97/barrel yesterday. This downward trend has translated to lower gasoline prices, with the average cost per gallon now at $3.66, down from $3.83 just a month ago. The reduction in oil prices is welcomed by the markets, as it eases concerns of surging inflation that could prompt the Federal Reserve to raise interest rates.

The outbreak of conflict in Israel has prompted investors to seek refuge in traditional safe havens like bonds and gold. Bonds have rallied nearly 4.5%, while the price of gold has risen more than 3% since Thursday.

The market will closely watch the reaction of bonds to the latest producer price index, or PPI, data. Additionally, the release of minutes from the recent Federal Reserve Open Market Committee (FOMC) meeting is anticipated today.

Individual stocks

Several individual stocks made headlines in the morning. Walgreens Boots Alliance (WBA) announced Tim Wentworth as its new CEO, and the company is set to unveil its earnings report tomorrow before the market opens. Delta Airlines (DAL) and Domino's Pizza (DPZ) will also release their earnings.

Exxon Mobil (XOM) reached an all-stock deal to acquire Pioneer Natural Resources (PXD) for nearly $60 billion, valuing Pioneer 7% above its closing price on Tuesday.

General Motors (GM) reached an agreement with the Canadian Auto Workers, potentially signaling a positive outlook for negotiations with United Auto Workers.

Finally, Birkenstock (BIRK) is set to begin public trading after pricing its initial public offering (IPO) at $46 per share.

Today's focus lies on bonds and their reaction to the stronger-than-expected producer price index (PPI). The recent bond rally has led to a significant drop in yields, reducing the likelihood of a Fed interest rate hike next month to under 11%, with less than a 30% chance of a rate increase in December. Additionally, the VIX has contracted by 16% since Monday, suggesting a reduction in market volatility.

In these dynamic times, it's essential for investors to stay informed and stay the course with their investment plans and long-term objectives. While short-term market fluctuations occur, it's important to maintain a strategic perspective.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on tastylive.com apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.