Oil Rises on Mideast Attacks; US Futures Decline: Markets Wrap


(Bloomberg) — Crude oil jumped on Monday in Asia after the US said Iranian-backed militants killed three service members. US equity futures retreated.

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West Texas Intermediate crude rose as much as 1.6% to $79.29 a barrel, the highest since November, after President Joe Biden pledged to retaliate over the first American deaths under enemy attack since Israel and Hamas went to war. Oil had also climbed on Friday after Houthi rebels attacked a vessel carrying Russian fuel.

“The news of three US troops being killed by a drone attack, and President Biden saying ‘we shall respond,” will likely dial up the market’s focus on the region,” said Andrew Ticehurst, a rates strategist at Nomura Inc. in Sydney. “Still, I’d expect data and central bank meetings to dominate a busy week for markets, with China PMI, the FOMC and BoE gatherings and US payrolls among the highlights.”

S&P 500 futures fell 0.2% and Nasdaq-100 contracts declined 0.3% on Monday, underscoring the potential that violence in the Middle East will undermine Asia-Pacific investors’ appetite for equities at the start of a crucial week for the global policy outlook. Australian stocks edged higher in early trading, while Japanese and Hong Kong futures had closed higher at the end of last week.

Stocks wavered and bonds retreated in the US on Friday, as mixed economic data spurred concerns the Federal Reserve will signal patience about the pace of interest-rate cuts when it meets on Wednesday. This week also brings a slew of key data, from European GDP on Tuesday, to China PMI and Australian inflation on Wednesday, then European inflation and a Bank of England policy decision on Thursday.

“We think the Fed is likely to reiterate its data-dependent stance and caution that it is willing to exercise patience,” analysts at ANZ Bank Ltd., including Miles Workman, wrote in a report. “The Fed will be cautious about any reacceleration of inflation pressures from above-trend growth and the resilient labor market.”

Chinese equities will look to build on their first weekly gain since the end of December, after the nation’s securities regulator announced Sunday it will halt the lending of certain shares for short selling from Monday. The authorities are taking measures following an alarming slide in Chinese stocks — the MSCI China Index has lost 60% from a February 2021 peak.

Singapore’s central bank will likely keep its tight monetary policy settings for a third straight review when it meets Monday, while retaining its sharp focus on still-elevated inflation.

Stocks

  • S&P 500 futures fell 0.2% as of 8:20 a.m. Tokyo time

  • Hang Seng futures rose 0.8%

  • Australia’s S&P/ASX 200 was 0.1% higher

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was 0.1% weaker at $1.0843

  • The Japanese yen was little changed at 148.07 per dollar

  • The offshore yuan was little changed at 7.1869 per dollar

Cryptocurrencies

  • Bitcoin fell 0.5% to $41,760.61

  • Ether fell 0.7% to $2,246.86

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.14%

  • Japan’s 10-year yield declined four basis points to 0.705%

  • Australia’s 10-year yield declined three basis points to 4.21%

Commodities

  • West Texas Intermediate crude rose 1.1% to $78.89 a barrel

  • Spot gold fell 0.1% to $2,018.52 an ounce

This story was produced with the assistance of Bloomberg Automation.

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