US and European equity futures gained as investors dialed back hedges put on before the weekend against an escalation of the Middle-East conflict. Gold and crude oil dropped as haven demand waned.
(Bloomberg) — US and European equity futures gained as investors dialed back hedges put on before the weekend against an escalation of the Middle-East conflict. Gold and crude oil dropped as haven demand waned.
Treasuries also declined as Israel held off on its ground offensive into Gaza amid efforts to secure the release of more hostages. Oil slipped below $87 a barrel, while gold slipped from a five-month high. The yen briefly weakened past 150 to the dollar.
Markets are starting to wind back some of last week’s haven bid after Hamas released two US hostages and aid started to trickle through Egypt’s border with Gaza at the weekend. Still, Israel has stepped up air raids on Gaza in preparation for the “next phase” of its conflict with Hamas, while also warning that Hezbollah risks dragging Lebanon into a wider regional war.
It’s “a carbon copy of last Monday’s session as we see a partial unwind of the safe-haven flows put on ahead of the weekend,” said Tony Sycamore, an analyst at IG Australia in Sydney.
Asian stocks dropped from the open, following Friday’s losses on Wall Street. China shares led declines amid property sector woes, while confidence waned further after Beijing announced a series of investigations into Foxconn Technology Group, Apple Inc.’s most important partner.
The yen slipped to as weak as 150.11 at the start of Asia trade before rapidly paring the move. Bank of Japan officials are pondering whether to tweak their yield-curve control setting at a policy meeting next week, the Nikkei newspaper reported Sunday, without saying where it got the information.
“Markets are again on high alert for a possible BOJ intervention,” Commonwealth Bank of Australia strategists including Joseph Capurso wrote in a note to clients. The yen is likely to remain under pressure this week “as the rise in the 10-year Japanese government bond yield, amid growing speculation of BOJ policy tightening, will do little to reduce Japan’s wide bond yield gap with the US,” they said.
Read more: Israel’s Support for Hostage Talks May Delay Invasion of Gaza
Global markets have been whipped around in recent weeks by climbing Treasury yields and growing concern about interest rates staying elevated for longer. Federal Reserve Bank of Cleveland President Loretta Mester said the US central bank is close to wrapping up its tightening campaign if the economy evolves as expected.
This week, traders will be parsing for clues on the outlook for global interest rates with inflation readings in Australia and Japan as well as economic activity data in the US and Europe. Fed Chairman Jerome Powell is due to give remarks and the European Central Bank will deliver a policy decision later in the week.
Key events this week:
- Taiwan jobless rate, industrial production, Monday
- Eurozone consumer confidence, Monday
- EU foreign ministers meet in Luxembourg, Monday
- Reserve Bank of Australia Governor Michele Bullock speaks in Sydney, Tuesday
- Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, Tuesday
- UK S&P Global / CIPS Manufacturing PMI, jobless claims, unemployment, Tuesday
- US S&P Global Manufacturing PMI, Tuesday
- UN Security Council is expected to open debate on the Middle East, Tuesday
- Microsoft, Alphabet earnings, Tuesday
- Australia 3Q CPI, Wednesday
- Germany IFO business climate, Wednesday
- IBM, Meta earnings, Wednesday
- South Korea GDP, Thursday
- European Central Bank rate decision, Thursday
- EU leaders summit in Brussels, Thursday-Friday
- US wholesale inventories, GDP, US durable goods, initial jobless claims, Thursday
- Intel, Amazon earnings, Thursday
- Japan Tokyo CPI, Friday
- China industrial profits, Friday
- US personal spending and income, University of Michigan consumer sentiment, Friday
- Exxon Mobil earnings, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 6:40 a.m. London time. S&P 500 Index fell 1.3% on Friday
- Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 1.5%
- Euro Stoxx 50 futures rose 0.2%
- Japan’s Topix fell 0.4%
- Australia’s S&P/ASX 200 fell 0.8%
- The Shanghai Composite fell 0.9%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $1.0576
- The Japanese yen was little changed at 149.94 per dollar
- The offshore yuan was little changed at 7.3265 per dollar
- The Australian dollar was little changed at $0.6311
- The British pound fell 0.1% to $1.2150
Cryptocurrencies
- Bitcoin rose 3.4% to $30,879.25
- Ether rose 3.6% to $1,700.37
Bonds
- The yield on 10-year Treasuries advanced six basis points to 4.97%
- Japan’s 10-year yield advanced 2.5 basis points to 0.860%
- Australia’s 10-year yield advanced four basis points to 4.78%
Commodities
- West Texas Intermediate crude fell 1.3% to $86.90 a barrel
- Spot gold fell 0.4% to $1,974.37 an ounce
This story was produced with the assistance of Bloomberg Automation.
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