(Bloomberg) — Global markets showed signs of stability as traders awaited further developments in the Middle East following Iran’s unprecedented attack on Israel this weekend.
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The dollar was little changed against its Group of 10 peers, while government bonds headed lower after yields fell in the previous session. Oil prices fell on speculation that the conflict would remain under control after Iran said “the matter can be considered closed,” and President Joe Biden reportedly told Israeli Prime Minister Benjamin Netanyahu that the US will not support an Israeli counterattack.
“The muted market reaction is likely due to the very complicated sentiment in the market at this stage,” said Hebe Chen, analyst at IG Markets. “Market participants are certainly not giving up hope that the events of this past weekend were just a one-off, as they hold their breath for what might happen next,” she added, referring to the attacks.
Shares in Asia fell to a six-week low, following Friday’s decline in US stock prices, escalating geopolitical risks, disappointing bank profits and the prospect of the Federal Reserve keeping interest rates high for longer. U.S. stock futures rose in Asia after the S&P 500 suffered its worst session since January on Friday during a flight to safety.
Chinese stocks were an outlier, thanks to renewed regulatory support from Beijing. The State Council promised on Friday to tighten the criteria for stock exchange listing, tackle illegal share sales and strengthen supervision of dividend payments.
Elsewhere, developer China Vanke Co. said. that it is making plans to resolve short-term liquidity pressures and operational issues, as China’s top leaders grow increasingly concerned about the country’s ongoing real estate crisis and its effect on the sluggish economy.
In other currencies, Malaysia’s central bank reaffirmed its willingness to support the ringgit, which is hovering near its lowest level since 1998. Meanwhile, Japanese Finance Minister Shunichi Suzuki said officials are keeping a close eye on the yen as it continues last week’s weakness against the dollar.
Aluminum and nickel rose sharply after new US and British sanctions banned the delivery of Russian supplies after midnight on Friday. Also won gold.
With investors already rattled by persistent inflation and the prospect of longer interest rates, the escalation of the Middle East crisis could inject new volatility into markets. As the conflict spreads, many say oil could surpass $100 a barrel and expect a flight to Treasuries, gold and the dollar, along with further stock market losses.
Bitcoin rebounded after falling nearly 9% in the aftermath of the attacks. Stock markets in Saudi Arabia and Qatar posted modest losses on Sunday amid thin trading volumes. The Israeli stock benchmark swung between gains and losses at least nine times before closing with a small gain.
As earnings season kicked off on Wall Street, results from the major banks offered the latest insight into how the U.S. economy is faring amid an interest rate trajectory clouded by persistent inflation.
JPMorgan Chase & Co. and Wells Fargo & Co. both reported net interest income – the income they generate from lending – that missed expectations given rising financing costs. Citigroup Inc.’s earnings exceeded analyst estimates as companies tapped the markets for financing and consumers leaned on credit cards — signs that a prolonged period of high interest rates will benefit big banks.
“Many economic indicators remain favorable. But looking ahead, we remain alert to a number of important uncertain forces,” said Jamie Dimon, CEO of JPMorgan. He mentioned the wars, rising geopolitical tensions, persistent inflationary pressures and the effects of quantitative tightening.
Traders will soon turn to looming economic data as they refine their bets on central bank easing cycles and the spring meetings of the International Monetary Fund and World Bank in Washington. This week Chinese growth figures and inflation figures from Japan, the eurozone and the United Kingdom will be published.
Main events this week:
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Industrial production in the eurozone, Monday
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US retail sales, empire production, business inventories, Monday
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Federal income tax due in the US, Monday
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The spring meetings of the IMF and World Bank start Monday in Washington. The most important ministerial meetings will take place from April 17 to 19
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CPI Canada, Tuesday
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Chinese real estate prices, retail sales, industrial production, GDP, Tuesday
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UK unemployment claims, unemployment, Tuesday
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House sales in New Zealand, CPI, Wednesday
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Eurozone CPI, Wednesday
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British CPI, Wednesday
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Australian unemployment, Thursday
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Japanese CPI, Friday
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The elections in India start on Friday
Some of the major moves in the markets:
Shares
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S&P 500 futures rose 0.2% as of 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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Euro Stoxx 50 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was 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
Bonds
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The yield on ten-year government bonds rose by three basis points to 4.55%
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The Japanese ten-year yield remained unchanged at 0.845%
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The Australian ten-year yield fell by 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 the help of Bloomberg Automation.
–With help from Yongchang Chin.
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