Equities fell, Treasuries rose and oil topped $90 a barrel on concern the war between Israel and Hamas may widen to a regional conflict.
(Bloomberg) — Equities fell, Treasuries rose and oil topped $90 a barrel on concern the war between Israel and Hamas may widen to a regional conflict.
US equity futures posted modest declines, while Europe’s Stoxx 600 Index dropped 1%. Treasuries gained, led by 10-year debt, and gold approached $2,000 an ounce. Bitcoin inched closer to $30,000. The dollar trimmed its advance.
Investors were rattled by reports of more clashes in the Middle East, with the Pentagon saying it’s seeing an increase in drone attacks in Iraq and Syria. An American destroyer also shot down cruise missiles and drones launched by Yemen-based Houthi militants toward Israel.
“The risk premium in crude has shot up again,” said Vandana Hari, founder of consultancy Vanda Insights. “As long as the Israel-Hamas tensions run high, crude will remain susceptible to further spikes on signs of an escalation.”
A turbulent week in markets has seen Middle East events drive volatility in oil prices and push investors out of riskier assets into havens like gold. At the same time, 10-year Treasury yields have soared 30 points as traders position for higher-for-longer interest rates from the Federal Reserve to cool inflation. Chair Jerome Powell suggested Thursday the Fed is inclined to hold rates steady again at its next meeting, while it watches key growth data.
In other currency moves Friday, the Israeli shekel weakened for a 10th day amid concerns over the potential for a broadening conflict. The pound slipped after UK retail sales tumbled more than expected. Meanwhile, yen traders remain on tenterhooks as Japan’s finance minister Shunichi Suzuki said it was important the currency moved stably and in line with fundamentals, just as it approached 150 per dollar.
Among individual stocks, American Express Co. gained in premarket trading after third-quarter revenue and profit soared to records. SolarEdge Technologies Inc. slumped 27% after cutting its sales forecast because of canceled orders. The declines spread across the sector, with German photovoltaic systems maker SMA Solar Technology AG down 16%.
Elsewhere, a record injection of extra cash by China may offer support after the nation’s stocks erased all gains seen during their massive reopening rally that took off late last year. The economy has been challenged this year by a lack of demand and a downturn in the property market.
Still, Morgan Stanley advises against buying the dip in Chinese equities as market sentiment is likely to stay fragile while foreign fund outflow could persist near-term. Meanwhile, concerns around property sector lingered on with Country Garden Holdings Co. missing a dollar bond interest payment. Asian stocks headed for their biggest weekly drop in two months.
Read more: China’s Country Garden Default Is All But Official, Restructuring Looms
Key events this week:
- Philadelphia Fed President Patrick Harker speaks, Friday
Some of the main moves in markets:
- S&P 500 futures fell 0.3% as of 7:07 a.m. New York time
- Nasdaq 100 futures fell 0.4%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 fell 1%
- The MSCI World index fell 0.2%
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0587
- The British pound fell 0.1% to $1.2129
- The Japanese yen was little changed at 149.93 per dollar
- Bitcoin rose 4% to $29,885.33
- Ether rose 3.2% to $1,616.75
- The yield on 10-year Treasuries declined five basis points to 4.93%
- Germany’s 10-year yield was little changed at 2.92%
- Britain’s 10-year yield advanced one basis point to 4.68%
- West Texas Intermediate crude rose 1.4% to $90.60 a barrel
- Gold futures rose 0.8% to $1,995.60 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Divya Patil.
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