Stocks were mixed at the start of another busy week of earnings and key central bank decisions.
(Bloomberg) — Stocks were mixed at the start of another busy week of earnings and key central bank decisions.
US futures declined after posting their best two-week rally since November 2020, while Europe’s benchmark was little changed. US-listed shares of Brazilian oil firm Petrobras tumbled in premarket trading after Luiz Inacio Lula da Silva won the presidential election. Chipmakers and US-listed Chinese stocks were also lower.
The dollar rose and the yen fell as traders positioned for another large interest-rate hike by the Federal Reserve this week, widening the policy divergence with the Bank of Japan. The euro and the pound also declined.
The yield on the 10-year Treasuries rose to 4.05% after surging by nine basis points on Friday. Yields on UK gilts were steady ahead of what could be the Bank of England’s biggest interest-rate hike in more than 30 years.
Wheat soared after Russia pulled out of a grain-export deal even as vessels continued to depart from Ukraine. Meanwhile, Ukraine warned of widespread blackouts after a massive wave of Russian missile attacks damaged power and water supplies across the country including in the capital Kyiv.
Read: Treasuries Swept Up in Global Rout as Inflation Fears Resurface
In Europe, inflation surged to a fresh all-time high, while the bloc’s economy lost momentum — reinforcing fears that a recession is now all-but unavoidable. That’s after a core gauge of US inflation accelerated in September, bolstering the case for more tightening.
All eyes will be on the US central bank, which is widely expected to raise rates by 75 basis points on Wednesday for a fourth time, while investors will be dissecting Chair Jerome Powell’s commentary for guidance on future moves.
Economists surveyed by Bloomberg the Fed will maintain its hawkish stance, laying the groundwork for interest rates reaching around 5% by March 2023, potentially leading to a US and global recession.
European natural gas fell after two days of gains as unseasonably warm weather reduces demand and eases concerns about shortages for the winter and oil declined as weak economic data from China fanned concerns about energy demand, but it was still set for the first monthly advance since May on OPEC+’s planned supply cuts.
Gold headed for its seventh straight month of declines, the longest losing streak since at least the late 1960s.
Key events this week:
- Companies reporting earnings this week include: Moderna, Pfizer, Airbnb, AIG, Maersk, Barrick Gold, BMW, Bharti Airtel, BP, ConocoPhillips, Estee Lauder, Ferrari, ING, Intercontinental Exchange, KKR, Mitsui, Newmont, Petrobras, Qualcomm, Restaurant Brands, Saudi Arabian Oil, SoftBank, Sony, Starbucks, Toyota, Uber and Yum! Brands.
- Reserve Bank of Australia policy decision, Tuesday
- US construction spending, ISM manufacturing index, Tuesday
- EIA crude oil inventory report, Wednesday
- Federal Reserve rate decision, Wednesday
- US MBA mortgage applications, ADP employment, Wednesday
- Bank of England rate decision, Thursday
- US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday
- ECB President Christine Lagarde speaks, Thursday
- US nonfarm payrolls, unemployment, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.5% as of 8:30 a.m. New York time
- Futures on the Nasdaq 100 fell 0.7%
- Futures on the Dow Jones Industrial Average fell 0.5%
- The Stoxx Europe 600 was little changed
- The MSCI World index rose 1.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.5%
- The euro fell 0.4% to $0.9926
- The British pound fell 0.7% to $1.1530
- The Japanese yen fell 0.8% to 148.73 per dollar
Cryptocurrencies
- Bitcoin was little changed at $20,709.94
- Ether rose 1.5% to $1,619.11
Bonds
- The yield on 10-year Treasuries advanced four basis points to 4.05%
- Germany’s 10-year yield advanced two basis points to 2.13%
- Britain’s 10-year yield advanced one basis point to 3.49%
Commodities
- West Texas Intermediate crude fell 1.7% to $86.37 a barrel
- Gold futures fell 0.1% to $1,643.10 an ounce
–With assistance from Tassia Sipahutar, Garfield Reynolds and Brett Miller.
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