(Bloomberg) — Global markets showed signs of stability as traders awaited further developments in the Middle East following Iran’s unprecedented attack on Israel over the weekend.
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The dollar was little changed against its Group of 10 peers, while Treasury bonds fell slightly after yields fell in the previous session. Oil prices fell on speculation that the conflict would remain contained after Iran said “the matter could be considered closed” and President Joe Biden reportedly told Israeli Prime Minister Benjamin Netanyahu that the U.S. is seeking an Israeli would not support the counterattack.
“The market’s muted reaction is likely due to the extremely complex market sentiment at this point,” said Hebe Chen, analyst at IG Markets. “Market participants are certainly not giving up hope that last weekend’s events were just a one-off event and are holding their breath for what might happen next,” she added, referring to the attacks.
Shares in Asia fell to a six-week low, tracking declines in U.S. stocks on Friday. This was due to escalating geopolitical risks, disappointing bank profits and the prospect that the Federal Reserve will keep interest rates high for longer. U.S. stock futures rose slightly in Asia after the S&P 500 suffered its worst session since January on Friday amid a flight to safety.
Chinese stocks were an outlier as Beijing provided renewed regulatory support. The State Council promised on Friday to tighten listing criteria, crack down on illegal share sales and step up monitoring of dividend distributions.
Elsewhere, developer China Vanke Co. said it was making plans to address liquidity pressures and near-term operating difficulties as China’s top leaders grew increasingly concerned about the country’s ongoing housing crisis and its impact on the faltering economy.
In other currencies, Malaysia’s central bank reiterated its willingness to support the ringgit, which is hovering near its lowest level since 1998. Meanwhile, Japanese Finance Minister Shunichi Suzuki said officials were closely watching the yen as it extended last week’s weakness against the dollar.
Aluminum and nickel rose sharply after the United States and United Kingdom imposed new sanctions banning any Russian shipments after midnight on Friday. Gold was also won.
With investors already unsettled by persistent inflation and the prospect of higher interest rates in the longer term, the escalation of the Middle East crisis could lead to new volatility in markets. As the conflict expands, many expect oil prices to exceed $100 a barrel and are anticipating a flight to government bonds, gold and the dollar, as well as further losses in stock markets.
Bitcoin recovered after plunging nearly 9% in the wake of the attacks. Stock markets in Saudi Arabia and Qatar posted slight losses on Sunday due to low trading volumes. The Israeli stock benchmark fluctuated between gains and losses at least nine times before closing with a small gain.
As Wall Street’s earnings season begins, results from major banks offered a fresh glimpse into the U.S. economy’s performance amid interest rate trends clouded by persistent inflation.
JPMorgan Chase & Co. and Wells Fargo & Co. both reported net interest income – the income they earn from lending – that fell short of estimates amid rising financing costs. Citigroup Inc.’s profit beat analysts’ estimates as companies tapped markets for financing and consumers turned to credit cards, signs that a prolonged period of elevated interest rates will benefit big banks.
“Many economic indicators remain favorable. “Looking forward, however, we remain alert to a number of significant uncertain forces,” said JPMorgan Chief Executive Officer Jamie Dimon. He pointed to the wars, growing geopolitical tensions, ongoing inflationary pressures and the impact of quantitative tightening.
Traders will soon turn their attention to upcoming economic data as they refine their bets on central bank easing cycles as well as the spring meetings of the International Monetary Fund and World Bank in Washington. Chinese growth data as well as inflation figures from Japan, the Eurozone and Great Britain are due this week.
Important events this week:
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Eurozone industrial production, Monday
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US retail sales, Empire manufacturing, corporate inventories, Monday
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Federal income taxes are due in the United States on Monday
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The spring meetings of the IMF and World Bank begin on Monday in Washington. The most important ministerial meetings will take place from April 17th to 19th
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Canada CPI, Tuesday
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China property prices, retail sales, industrial production, GDP, Tuesday
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UK Jobless Claims, Unemployment, Tuesday
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New Zealand home sales, CPI, Wednesday
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Eurozone CPI, Wednesday
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UK CPI, Wednesday
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Unemployment in Australia, Thursday
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Japan CPI, Friday
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Elections in India begin on Friday
Some of the key moves in the markets:
Shares
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S&P 500 futures rose 0.2% at 12:32 p.m. Tokyo time
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Nikkei 225 futures (OSE) fell 1.1%
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Japan’s Topix fell 0.5%
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Australia’s S&P/ASX 200 fell 0.4%
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Hong Kong’s Hang Seng fell 0.8%
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The Shanghai Composite rose 1.2%
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The Euro Stoxx 50 futures were hardly changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro remained little changed at $1.0650
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The Japanese yen fell 0.3% to 153.70 per dollar
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The offshore yuan rose 0.1% to 7.2589 per dollar
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The Australian dollar rose 0.2% to $0.6483
Cryptocurrencies
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Bitcoin rose 2.2% to $65,300.21
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Ether rose 2.6% to $3,149.39
Tie up
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The 10-year Treasury yield rose three basis points to 4.55%
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Japan’s 10-year yield was unchanged at 0.845%
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Australia’s 10-year yield fell two basis points to 4.25%
raw materials
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West Texas Intermediate crude fell 0.4% to $85.36 a barrel
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Spot gold rose 0.6% to $2,357.91 an ounce
This story was produced with support from Bloomberg Automation.
– With support from Yongchang Chin.
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