Stocks Steady in Nervy Wait for Israel Response: Markets Wrap

(Bloomberg) — Stocks posted small moves and bonds steadied as flaring tensions in the Middle East put markets in a wait-and-see mode. Oil rose and gold hovered near a record. 

With traders awaiting Israel’s response to a missile barrage from Iran, and Brent crude topping $75 a barrel, geopolitical fears have replaced optimism around central bank policy easing as the main market driver. The escalation in the region spurred a flight to safety on Tuesday and sent Wall Street’s fear gauge — the VIX — to a key level that usually indicates more market swings are in store. 

Europe’s Stoxx 600 index ticked higher, led by energy firms and defense stocks including Saab AB and Rheinmetall AG. Futures on the S&P 500 pointed to a muted open after Tuesday’s flight to safety. Treasury yields edged up, with the 10-year around 3.76%. The dollar traded flat. 

Hopes for monetary stimulus and a soft landing for the US economy “could yet be challenged, if we were to see these escalations persist,” Laura Cooper, global investment strategist at Nuveen, told Bloomberg TV. 

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Chinese stocks listed in Hong Kong, meanwhile, jumped the most in almost two years after Beijing followed other major cities in relaxing home purchase rules. The massive stimulus efforts announced by China’s leaders last week sent local assets soaring and helped lift markets overseas.

In European company news, JD Sports Fashion Plc fell after reporting results and after Nike Inc. reported a drop in quarterly sales after the US market close. Oil producers and defense stocks climbed as Israel vowed to retaliate against Iran after it fired about 200 ballistic missiles at Israel in a severe escalation of hostilities that has spurred fears of a Middle East-wide war.

Separately, Republican JD Vance largely succeeded in sanding down his hardline reputation, while Democrat Tim Walz’s nerves were on display as the vice presidential candidates battled over immigration, abortion, and climate change during Tuesday’s debate. 

Key events this week: 

• S&P Global Manufacturing PMI on Wednesday
• Fed speakers include Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman on Wednesday
• US nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 was little changed as of 10:25 a.m. London time
• S&P 500 futures fell 0.3%
• Nasdaq 100 futures fell 0.3%
• Futures on the Dow Jones Industrial Average fell 0.4%
• The MSCI Asia Pacific Index rose 0.3%
• The MSCI Emerging Markets Index rose 1.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1065
• The Japanese yen fell 0.5% to 144.29 per dollar
• The offshore yuan was little changed at 7.0277 per dollar
• The British pound was little changed at $1.3284

Cryptocurrencies

• Bitcoin rose 1.2% to $61,544.65
• Ether rose 0.7% to $2,467.99

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.76%
• Germany’s 10-year yield advanced five basis points to 2.08%
• Britain’s 10-year yield advanced seven basis points to 4.01%

Commodities

• Brent crude rose 2.5% to $75.38 a barrel
• Spot gold fell 0.4% to $2,653.69 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck.

©2024 Bloomberg L.P.