por admin » Mié Nov 16, 2022 7:08 am
US Futures Wobble, Yields Rise as War Threat Eases: Markets Wrap
Biden says unlikely rocket inside Poland was fired by Russia Euro rises, zloty trims declines in volatile FX trading
Sujata Rao-Coverley
November 15, 2022, 6:02 PM EST
US equity futures erased gains as a rocket strike inside the Polish border kept investors jittery about the prospect for escalation in the Russia-Ukraine war, though the euro and the Polish zloty recouped earlier knee-jerk losses.
Contracts on the S&P 500 and Nasdaq 100 were little changed after rising as much as 0.4%, while a European equity benchmark extended a loss to 0.7%. Treasury yields rose after US President Joe Biden told allies that the explosion Tuesday night in Poland was caused by Ukrainian air defenses, and unlikely to have been fired by Russia.
The comments soothed fears of an immediate spillover from the conflict, knocking the yen and dollar lower, as demand for safe-haven assets gradually faded.
“It’s a reminder that the risk of escalation is in the background. It’s something we need to watch for, because any escalation of military action and additional impact on energy supply could seriously disrupt markets,” said Kiran Ganesh, managing director at UBS Global Wealth Management.
Polish zloty fluctuates after deadly missiles, remarks from allies
Read more: Panic Eases Over Poland Strike as Allies Query Rocket’s Origin
Stocks have surged in the past week as softer-than-expected US inflation data has raised expectations the Federal Reserve may be able to slow down its rate-hiking pace. The data has pushed the dollar and Treasury yields lower, while a raft of strong company earnings have added to markets’ ebullience.
The greenback shed 0.2% against a basket of peers. The US currency has now lost close to 6% from end-September peaks, last week posting its biggest loss against 10 main rivals since the early days of the pandemic in 2020.
Colin Asher, senior economist at Mizuho Bank Ltd. sees the moves as overdone, and predicted more volatility ahead. US retail sales and housing market data due later on Wednesday may offer more clues on the state of the US economy.
“I am more in the dollar-plateau versus the dollar-peak camp,” he said. “Inflation may have peaked but that doesn’t mean it’s coming down rapidly. We have probably seen the peak for the dollar but it wouldn’t surprise me if we go back into a period of softer equities.”
The pound showed a muted reaction to data showing UK annual inflation had jumped to 11.1%, trading marginally higher against the dollar. Investors focused instead on Thursday’s autumn budget which is expected to unveil spending cuts and tax hikes to repair the hole in government finances.
Meanwhile, stocks linked to Donald Trump, including blank check company Digital World Acquisition Corp., surged after the former president officially entered the 2024 US presidential race.
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Key events this week:
US business inventories, cross-border investment, retail sales, industrial production, Wednesday
Fed’s John Williams, Lael Brainard and SEC Chair Gary Gensler speak, Wednesday
ECB President Christine Lagarde speaks, Wednesday
Eurozone CPI, Thursday
US housing starts, initial jobless claims, Thursday
Fed’s Neel Kashkari, Loretta Mester speak, Thursday
US Conference Board leading index, existing home sales, Friday
BNP Paribas WM's Tam on Markets
Grace Tam, Hong Kong Chief Investment Advisor at BNP Paribas Wealth Management, discusses her outlook for markets and investment strategies. She speaks with Bloomberg on “Daybreak Middle East”.
Source: Bloomberg
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.7% as of 11:20 a.m. London time
Futures on the S&P 500 were little changed
Futures on the Nasdaq 100 were little changed
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.3%
The MSCI Emerging Markets Index fell 0.3%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.7% to $1.0425
The Japanese yen was little changed at 139.41 per dollar
The offshore yuan fell 0.5% to 7.0840 per dollar
The British pound rose 0.4% to $1.1911
Cryptocurrencies
Bitcoin fell 0.9% to $16,740.92
Ether fell 1.3% to $1,229.57
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.79%
Germany’s 10-year yield was little changed at 2.10%
Britain’s 10-year yield declined three basis points to 3.27%
Commodities
Brent crude rose 0.6% to $94.42 a barrel
Spot gold rose 0.2% to $1,782.21 an ounce