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EUROPEAN CARRIERS: WHO RISKS MORE IF ISRAEL-HAMAS CONFLICT WIDENS? (1035 EDT/1435 GMT)
As a result of the conflict in Israel and Palestinian territories, several international airlines cancelled passenger flights this month while Israeli ports operate with restrictions.
UBS analysts had a closer look at the revenue exposure of the European transport firms to the Middle East, discussing the possible implications of a wider conflict.
"A potential escalation could lead to a reduced cargo capacity on Asia-Europe routes which represent around one-fifth of the global trade", wrote in a Cristian Nedelcu, Head of European Transport Equity Research at UBS.
The Maersk MAERSKb.CO Terminals business has around 14% volume exposure in the Middle East, while the German container shipping company Hapag Lloyd HLAG.DE generates almost 10% of revenues there, the broker added.
Moreover, investors fear that a wider conflict could hit oil supply from the Middle East, with rising crude prices likely leading to cost increases for the logistics and shipping .
Since Hamas' attack on Israel, Brent crude LCOc1 surged 8%, standing above $91 a barrel on Monday.
On the short term, German logistic group DHL's profitability DHLn.DE could pay a temporary heavy price due to lagged pass through of higher fuel surcharges in its Express division, according to UBS.
On the passenger front, an escalation of the conflict may discourage travels in the region.
"Having in mind the higher than average spend per passenger for travelers from Middle East, the potential headwinds to retail revenues are likely to be higher", said the broker, which calculated that Middle East may represent around 10% of the retail revenues for the European hubs.
Looking at the traffic exposure to the region based on 2019 data provided by UBS, Flughafen Zuerich FHZN.S is at the top of the list in Europe (5.9%), followed by German Fraport FRAG.DE (5.2%) and France's ADP ADP.PA (4.8%), while Spain's Aena AENA.MC stays lower (1.8%).
(Matteo Allievi)
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U.S. STOCKS REBOUND AFTER STUMBLING OUT OF THE GATE (1018 EDT/1418 GMT)
Major U.S. averages are slightly lower in the early stages of trading on Monday, with investors eyeing several
key support levels
on the S&P 500 .SPX after the benchmark index fell through its 200-day moving average on Friday.
After once again flirting with the 5% mark, the 10-year U.S. Treasury yield US10YT=RR has backed off to 4.91% giving some upside momentum to equities after a sharply lower open that saw the Nasdaq .IXIC fall more than 1%.
With the Federal Reserve in its "blackout period" ahead of week's policy meeting, investors will eye corporate earnings as the pace of results picks up this week, while more Treasury supply will come to the market in the form of 2-year, 5-year and 7-year .
Below is your market snapshot:
(Chuck Mikolajczak)
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S&P 500 INDEX: POISED FOR 4,200 SUPPORT TEST (0900 EDT/1300 GMT)
The S&P 500 index .SPX suffered further technical damage last week which has traders eyeing the support levels around the closely watched 4,200 area.
The benchmark index ended below its rising 200-day moving average (DMA) on Friday for the first time since March 17. The 200-DMA should ascend to about 4,235 on Monday.
On the weekly charts, the 40-week moving average (WMA) can seen as a proxy for the 200-DMA, and that should be resistance around 4,252 this week:
On Monday, e-mini S&P 500 futures EScv1 are suggesting the SPX is poised to fall around 15 points at the open. If so, the index should dip just below the early October low at 4,216.45 in early trade.
The support is at the 23.6% Fibonacci retracement of the March 2020-January 2022 advance at 4,198.70, and the early February high was at 4,195.44.
The 100-WMA should be around 4,180 this week, and the 50% retracement of the 2022 decline is at 4,155.10. There is a weekly Gann Line around 4,116.
A decline to the 4,198-4,155 area would put the SPX down 8.5%-9.5% from its July 31 closing high of 4,588.96. A slide to the weekly Gann Lien would put the SPX down just over 10%.
Strength back over 4,252, confirmed by the weekly close, would look constructive shorter-term.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)