EconomyThe markets close the first day of October with...

The markets close the first day of October with a greater appetite for risk

The stock market rallied sharply on Monday after a volatile September and quarters. Stocks still follow the example of the bond market, which fell this Monday due to a greater appetite for risk on the part of investors, because there are purchases of opportunity after a negative quarter. However, concerns still linger that something in the global financial system could break.

At the close of the day, the Dow Jones began October with a strong momentum of 2.64%, reaching a level of 29,490.03 points. The S&P 500 ended with a price of 3,678.43 units and a positive variation of 2.59%, while the Nasdaq rose 2.27% to end at 10,815.43 points. For the Dow Jones, the variation registered this Monday was its largest increase in more than three months, while for the S&P 500 and Nasdaq it was their best performance since August.

“US stocks are rising to start October, helped by falling Treasury yields after a key manufacturing report showed notable signs of downward pressure on inflation,” analysts at consultancy Edward Jones said.

Analysts agree it’s premature to say the Fed is almost done with tightening, but Wall Street appears to be growing confident that they could do so in December. Investors are beginning to doubt that central banks globally will remain aggressive in fighting inflation as risks to financial stability mount. First the market crash and now because Credit Suisse is struggling with capital problems.

Mexico’s indices followed the same trend as the global market. The S&P/BMV IPC ended at 45,483.41 points and an increase of 1.92%, while the FTSE BIVA closed up 1.70% with 946.63 units.

“Stocks rally as investors are happy to put a terrible August and September behind them. Stocks ended off highs as people put money to work getting started in October, rebounding after S&P futures fell below 3,600 overnight to hit their lowest level since November 2020. However before record a strong 2.5% rise on the day across all major averages (and post the best one-day gains on the day as well since November 2020),” analysts at Hammerstone Markets noted.

The gains of technology companies on the Nasdaq were limited by the fall of Tesla close to 9%, due to problems in the distribution of its cars.

Bitcoin started the month with an increase of 0.74% from Friday’s close, reaching a level of 19,567.1. In the third quarter, the cryptocurrency registered a growth of 3.7%, which would break a negative streak of two quarters.

“Crypto asset markets followed a careful path last week, amid heightened macroeconomic and investment market pressures emanating from the bond and fiat markets,” said Simon Peters, an analyst at eToro.

Oil price starts with rebound

This Monday, the price of Brent rose 1.15%, to 88.97 dollars a barrel, while the US West Texas Intermediate (WTI) crude rose strongly 4.83%, to 83.33 dollars.

In the energy market, oil moved considerably higher, after learning that there is a plan for OPEC member countries to cut crude oil production.

“Energy traders are raising crude oil prices ahead of the OPEC+ meeting as expectations are high that they will deliver the largest reduction in production since the start of the pandemic. This will be the first in-person meeting since 2020, which means that they will probably do something big here and deliver a reduction of more than 1 million barrels per day”, said Edward Moya, analyst at OANDA.

The peso registers its second day of appreciation

The local currency had an appreciation of 0.45% compared to the close of Friday, with a price of 20,037 pesos per dollar, according to data from the Bank of Mexico (Banxico).

The forex market continues to trade volatile, with sterling recovering after the UK government backtracked on its plan to cut taxes on the high earners.

“The Mexican foreign exchange market will continue to be subject to everything related to messages from central banks regarding interest rate hikes, the risk of economic recession, the situation in the United Kingdom and geopolitical issues. Given the above, during the week the Mexican currency could fluctuate between 19.90 and 20.40 spot”, indicated CI Banco analysts.

How would the elimination of daylight saving time affect the markets?

The elimination of summer time in Mexico does not affect the operations of the stock market, since the Stock Exchanges adjust their hours, opening and closing at the same time as the US Stock Exchange.

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