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• S&P 500 books best day since late-August as stocks rally to start the week
  U.S. stocks rallied on Monday to finish the first trading day...
  U.S. stocks rallied on Monday to finish the first trading day of the week in the green as investors shrugged off concerns the conflict that erupted last week between Israel and Hamas may lead to a broader war in the Middle East while looking ahead to the start of the third-quarter earnings season to better gauge the economy’s temperature. The Dow Jones Industrial Average DJIA advanced 313 points, or 0.9%, to end at 33,984, while the S&P 500 SPX rose 1.1% and the Nasdaq Composite COMP gained 1.2%.
  
  The rally in the traditional safe-haven assets paused on Monday, with the most-active December gold contract settled lower, at $1,934.30 an ounce on Comex, reversing course after rising safe-haven demand spurred a series of gains in the yellow metal. U.S. Treasury yields rose on Monday afternoon, with the yield on the 10-year Treasury up 8.1 basis points to 4.709%, while the yield on the 30-year Treasury jumped 8.8 basis points to 4.865%, according to Dow Jones Market Data.
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• 70% chance Israel-Gaza war spreads, threatening oil, strategist warns
  The Israel-Hamas war has a more than 50% chance of drawing in militant groups from Lebanon or Syria,...
  The Israel-Hamas war has a more than 50% chance of drawing in militant groups from Lebanon or Syria, or producing a direct conflict with Iran — creating more oil disruptions than financial markets currently think.
  
  That’s the view of Matt Gertken, chief geopolitical strategist for Montreal-based BCA Research. He sees a 70% chance of the conflict expanding beyond Gaza in the next 12 months.
  
  Growing instability in the Middle East poses a 31% chance of major oil shocks and investors should prepare to make such shocks their base case over the next 12-24 months, according to BCA Research. Gertken recommends that investors “go long defense stocks and energy versus cyclicals.”
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• European Gas Rally Takes Breather Amid Milder Weather Forecasts
  European natural gas prices declined after rallying more than 40% last week, with traders weighing milder...
  European natural gas prices declined after rallying more than 40% last week, with traders weighing milder weather forecasts and international efforts to contain the conflict in the Middle East. Benchmark futures dropped as much as 8.5% on Monday, retreating from an eight-month high.
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• Energy Sector Commentary for Monday
  The energy sector is off to a...

  The energy sector is off to a higher start, supported by strength in the crude complex and the major market futures which are up as investors wait for more third-quarter results.

  
  

  WTI and Brent crude oil futures are kicking off the week in positive territory as market participants keep a close eye on the conflict in the Middle East to see if it escalates further. Israeli air strikes on Gaza intensified on Monday, after diplomatic efforts to arrange a ceasefire in southern Gaza to allow foreign passport holders to leave failed. Elsewhere, the United States last week imposed the first sanction on owners of tankers carrying Russian oil prices above the G7’s price cap of $60 a barrel. This afternoon the EIA will release its Drilling Productivity Report which will include updated shale oil production estimates for October and November.

  
  

  Natural gas futures are trading lower on milder than normal weather and on estimates for a weekly storage build of 88 Bcf to 92 Bcf vs the 5-yr average of 85 Bcf.

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• India, Indonesia Risk Biggest Fallout From Geopolitical Shocks
  (Bloomberg) -- A triumvirate of high oil prices, a surging dollar, and geopolitical instability are set...
  (Bloomberg) -- A triumvirate of high oil prices, a surging dollar, and geopolitical instability are set to weigh on India and Indonesia among Asia’s emerging markets, while energy exporter Malaysia may prove a rare beneficiary.
  
  “If higher oil prices persist for a prolonged period, we see India, Thailand, the Philippines, and Indonesia more vulnerable to terms of trade deterioration,” said Lavanya Venkateswaran, a senior economist at Oversea-Chinese Banking Corp. Ltd. “Moreover, as ‘twin deficit’ economies — current account and fiscal deficits — they may be more vulnerable to capital outflows.”
  
  
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