(Bloomberg) – Financial markets started the week with modest asset moves as investors assessed the latest central bank comments and developments in Ukraine.
Tech stocks led gains in U.S. stocks, powered by Twitter Inc. The social media company jumped 31% after Tesla Inc. chief executive Elon Musk took a 9.2% stake in the society. Starbucks Corp. declined after founder Howard Schultz suspended a stock buyback plan. Meanwhile, U.S.-listed Chinese stocks like Baidu Inc. and Tencent Holdings Ltd. rose after China removed a key hurdle to allow the US full access to audits.
“As the first quarter begins to recede into the rearview mirror, investors will focus this week on the first tranche of first-quarter S&P 500 results ahead of the unofficial start of earnings season,” wrote strategist John Stoltzfus. chief investment officer at Oppenheimer.
The second quarter got off to a slow start, with investors awaiting the minutes of the Federal Reserve meeting on Wednesday and the start of the corporate earnings season next week. The 10-year Treasury yield rose and the dollar strengthened against its peers. WTI crude rose above $103 a barrel as traders assessed the Covid outbreak in China and scrambled to tap strategic reserves.
The Stoxx Europe 600 index fluctuated before ending higher. Consumer discretionary stocks helped lead the gains, with Delivery Hero SE surging after a profit forecast. Healthcare stocks were also higher as Roche Holding AG climbed after US regulators granted priority review for its Covid-19 drug Roactemra.
Russian and Ukrainian negotiators are expected to resume video talks on Monday, after the European Union condemned Russia for atrocities committed by its military in several Ukrainian cities and President Joe Biden said Vladimir Putin could be tried for crimes of war. This dims hopes of an imminent breakthrough in peace talks.
“We hope the talks will continue to progress towards a ceasefire and the exit of Russian troops, but if the process so far continues, it may not happen anytime soon,” said senior analyst Craig Erlam. markets at Oanda Europe Ltd. “While progress has been positive for risky assets so far, they remain vulnerable to setbacks in ongoing talks amid ongoing attacks.”
The Treasury yield curve is increasingly issuing warnings that economic growth will slow as the Federal Reserve raises rates to rein in inflation fueled in part by commodities. The US two-year yield broke above the 30-year mark for the first time since 2007, joining reversals on other parts of the curve. The Fed’s minutes later this week will shape opinions on the chances of a half-percentage-point rate hike in May and provide key details on how the central bank will reduce its balance sheet.
“Global equity investors began 2022 with aggressive central banks as their primary concern. However, the brutal war between Russia and Ukraine delivered the final blow that sent many global indices close to bear market territory. said Megan Horneman, chief investment officer at Verdence Capital Advisors, in a note. “Bond investors felt the pain of the end of the Fed’s accommodative monetary policy as the Fed hiked rates for the first time. since 2018. Equity investors have been surprised by many indices in contractionary territory.”
Key events to watch this week:
- Reserve Bank of Australia rate decision on Tuesday
- Fed Governor Lael Brainard speaks on Tuesday
- Federal Reserve Minutes, Wednesday
- China Caixin Composite and Services PMI, Wednesday
- EIA Crude Oil Inventory Report, Wednesday
- Philadelphia Fed President Patrick Harker speaks on Wednesday
- St. Louis Fed’s James Bullard, Atlanta Fed’s Raphael Bostic and Chicago Fed’s Charles Evans speak at separate events Thursday
- Reserve Bank of India rate decision on Friday
Some of the major movements in the markets:
- The S&P 500 rose 0.8% at 4 p.m. PT
- The Nasdaq 100 rose 2%
- The Dow Jones Industrial Average rose 0.3%
- The MSCI World index rose 0.8%
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.7% to $1.0970
- The pound was unchanged at $1.3114
- The Japanese yen fell 0.2% to 122.76 per dollar
- The yield on 10-year Treasury bills rose two basis points to 2.40%
- Germany’s 10-year yield fell five basis points to 0.51%
- The UK 10-year yield fell six basis points to 1.55%
- West Texas Intermediate crude rose 4.4% to $103.60 a barrel
- Gold futures rose 0.7% to $1,936.70 an ounce
©2022 Bloomberg LP