Oil Steadies, Treasuries Dip as Iran Stresses Ease: Markets Wrap

(Bloomberg) — Global markets calmed Monday as traders speculated that diplomatic efforts would help prevent the conflict between Iran and Israel from escalating.

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European stocks advanced and U.S. stocks signaled a rebound on Wall Street after the S&P 500 fell 1.5% on Friday. Treasuries slid with the dollar. Brent crude fell below $90 a barrel. Gold rose to $2,347 an ounce.

While nerves are still on edge given the possibility that Israel could retaliate after Iran fired a barrage of missiles and drones over the weekend, investors were somewhat reassured after the Iranian mission to the United Nations declared that the matter “can be considered settled”. The United States and other countries have also called for restraint to avoid a full-blown regional war.

“It’s OK to build more geopolitical risk premiums into assets, but ultimately, equity markets are still only about 2% off their all-time highs,” said Timothy Graf, head of the EMEA macro strategy at State Street. “This was a well-heralded geopolitical development. Much of the bad news already lies in prices.

The safe haven role of Treasuries faces pressure from the impact of oil prices

Markets have been rattled by the threat of a cycle of strikes and counter-strikes in the Middle East, which could push energy prices higher at a time when policymakers are still struggling to bring down energy prices. ‘inflation. But for now, traders believe that the situation seems contained.

“So far, there appears to be no risk that inflation expectations are unanchored,” Graf said. “The inflation we are seeing because of commodity prices is entirely supply driven. »

Although unprecedented, the assault caused minimal damage and no deaths as almost all projectiles were intercepted. American, British and French air forces shot down some in coordination with the Israelis.

The European version of the VIX index fell 7%, a sign that concerns are easing. The Israeli shekel rebounded after a period of selling, rising as much as 0.9% on Monday.

Earnings season continues today with the release of Goldman Sachs Group Inc. and Charles Schwab Corp. With investor positioning looking “very tight” and indexes near all-time highs, it’s unlikely that an upbeat earnings season can continue to propel stocks higher, according to JPMorgan Chase & Co strategists.

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“We need a clear acceleration in earnings in order to justify current stock valuations, which we fear will not materialize,” Mislav Matejka wrote in a note.

Elsewhere, aluminum hit a record high on the London Metal Exchange as traders reacted to new US and UK sanctions banning deliveries of Russian supplies produced after midnight on Friday.

The restrictions on key industrial metals – aimed at limiting President Vladimir Putin’s ability to finance his war machine – are unlikely to stop Russian sales, but inject significant uncertainty into commodity markets that have already been reshaped at the following Russia’s invasion of Ukraine.

Key events this week:

• Euro zone industrial production, Monday

• U.S. Retail Sales, Empire Manufacturing, Business Stocks, Monday

• Federal income tax will be due in the United States on Monday

• The spring meetings of the IMF and the World Bank begin Monday in Washington. The main ministerial meetings will be held from April 17 to 19

• Canadian CPI, Tuesday

• China real estate prices, retail sales, industrial production, GDP, Tuesday

• Jobless claims in the United Kingdom, unemployment, Tuesday

• New Zealand house sales, CPI, Wednesday

• Eurozone CPI, Wednesday

• UK CPI, Wednesday

• Unemployment in Australia, Thursday

• Japan CPI, Friday

• India elections begin Friday

Some of the main market movements:

Actions

• The Stoxx Europe 600 rose 0.3% at 10:33 a.m. London time

• S&P 500 futures rose 0.4%

• Nasdaq 100 futures rose 0.5%

• Dow Jones Industrial Average futures rose 0.2%

• The MSCI Asia-Pacific index fell 0.9%

• The MSCI Emerging Markets Index fell 0.8%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.1% to $1.0658

• The Japanese yen fell 0.4% to 153.87 per dollar

• The offshore yuan rose 0.2% to 7.2556 per dollar.

• The British pound rose 0.3% to $1.2486

Cryptocurrencies

• Bitcoin rose 4.5% to $66,717.4

• Ether rose 6% to $3,252.61

Obligations

• The 10-year Treasury yield rose three basis points to 4.55%

• The German 10-year yield rose four basis points to 2.40%

• The UK 10-year yield rose six basis points to 4.19%

Raw materials

• Brent crude fell 1.2% to $89.35 a barrel

• Spot gold rose 0.2% to $2,347.96 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Winnie Hsu and Allegra Catelli.

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