(Bloomberg) — Markets started this week on a cautious note as investors awaited updates on the central bank’s interest rate outlook and braced for big gains. Oil prices rose amid rising tensions in the Middle East.
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Europe’s Stoxx 600 index remained near its highest level since January 2022, supported by gains in energy stocks. S&P 500 and Nasdaq 100 futures contracts were strong. Asian stocks rose on optimism over China’s latest stock market strengthening measures.
Brent crude oil and West Texas Intermediate crude oil rose for the fourth day in a row, hitting their highest intraday trading since November. The United States says Iranian-backed extremists have killed three service members, and President Joe Biden has vowed to retaliate. Oil prices were rising on Friday after Houthi rebels attacked a ship carrying Russian fuel.
Escalating tensions in the Middle East have already triggered major events for investors this week, with Federal Reserve policy decisions on Wednesday, Bank of England policy decisions on Thursday, and US jobs data on Friday. In addition to this, there are many. Companies also scheduled to report earnings include Apple, Microsoft and Google’s parent company Alphabet.
In corporate news Monday, stocks rose after Holcim, the world’s largest cement maker, announced plans to spin off its fast-growing North American operations. Royal Philips NV fell 6% after reports that it would temporarily suspend sales of sleep apnea machines and ventilators in the United States. Bayer AG’s stock price slumped after its Monsanto unit was ordered by a Pennsylvania jury to pay more than $2.2 billion to former users of its Roundup herbicide. Ryanair Holdings fell after lowering its profit outlook.
The dollar was strong, but U.S. Treasury yields fell slightly.
China’s securities regulator announced over the weekend that it would stop lending some stocks to short sellers from Monday. The new initiative is in addition to steps taken in recent weeks to stem the decline in Chinese stocks, which has seen the MSCI China Index fall by about 60% from its February 2021 peak.
“The very negative conditions leading to this could open the door to a technical rebound in Chinese stocks,” Homing Li, senior macro strategist at Lombard Odier, said on Bloomberg TV. “What we really need is a change in the inflation outlook for this country and sentiment across the private sector, so we’re a little bit more cautious.”
An index of mainland Chinese stocks listed in Hong Kong rose as much as 2.1% before paring its gains. Mainland stocks barely matched the gains of their Hong Kong peers amid concerns over a proposal to require U.S. cloud companies to disclose the foreign customers for which they are developing AI applications.
Chinese real estate stocks erased gains after a Hong Kong court ordered the liquidation of China Evergrande Group. Trading was halted after the company’s shares fell 21%.
The Fed is not expected to change policy on Wednesday, said Win Hsin, global head of currency strategy at Brown Brothers Harriman.
“While discussions regarding a slowdown and eventual end to quantitative tightening are expected to continue, we believe it is premature to announce any changes at this meeting,” he said in a note. “Dollar risks remain biased to the upside this week as there is room for future federal funds pricing to converge towards FOMC expectations.”
This week’s main events:
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Australian retail sales Tuesday
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Eurozone Economic Confidence, GDP, Consumer Confidence, Tuesday
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European Central Bank Directors Boris Vujicic and Philip Lane speak on Tuesday
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U.S. Conference Consumer Confidence Committee, Tuesday
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Microsoft and Alphabet are scheduled to report earnings on Tuesday.
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Australian CPI, Wednesday
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Japan’s industrial production, retail sales, Wednesday
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China Non-Manufacturing PMI, Manufacturing PMI, Wednesday
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French consumer price index, Wednesday
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German CPI, unemployment rate, Wednesday
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ECB Chief Economist Philip Lane speaks on Wednesday
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Fed interest rate decision, US employment cost index, Wednesday
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Boeing releases financial results on Wednesday
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U.S. Treasury Quarterly Refunds Wednesday
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Japan PMI, Thursday
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China Caixin Manufacturing PMI Thursday
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Eurozone S&P World Manufacturing PMI, CPI, Unemployment Rate, Thursday
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Bank of England interest rate decision Thursday
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ECB Board Member Mario Centeno speaks on Thursday
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US ISM Manufacturing Initial Unemployment Claims, Thursday
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Apple Inc., Amazon.com Inc. and Meta Platforms Inc. to report earnings on Thursday
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ECB Board Member Mario Centeno speaks on Friday
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US employment statistics, University of Michigan consumer sentiment, factory orders, Friday
The main movements in the market are:
stock
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Stoxx Europe 600 little changed as of 8:20 a.m. London time
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S&P500 futures little changed
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Nasdaq 100 futures rose 0.2%
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Dow Jones Industrial Average futures little changed
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MSCI Asia Pacific index rises 1%
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MSCI Emerging Markets Index rose 0.7%
currency
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Bloomberg Dollar Spot Index little changed
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The euro fell 0.2% to $1.0835.
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The Japanese yen rose 0.2% to 147.86 yen to the dollar.
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The offshore yuan remained almost unchanged at 7.1900 yuan to the dollar.
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The British pound was almost unchanged at $1.2709.
cryptocurrency
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Bitcoin remains almost unchanged at $41,982.55
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Ether fell 0.4% to $2,254.42.
bond
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The 10-year Treasury yield fell 2 basis points to 4.12%.
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Germany’s 10-year bond yield fell 3 basis points to 2.27%.
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The UK 10-year bond yield fell by 1 basis point to 3.95%.
merchandise
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Brent crude rose 0.6% to $84.03 per barrel.
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Spot gold rose 0.7% to $2,032.44 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Joanna Ossinger and Ishika Mookerjee.
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