(Bloomberg) — Stocks in Europe struggled for traction and U.S. index futures slipped as traders weighed the latest developments in the Ukraine war, with some European governments pushing for stiffer sanctions on Russia amid reports that its troops executed unarmed civilians.
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The Stoxx Europe 600 index fluctuated at the open, with banks and car makers leading declines. The healthcare sector outperformed as Roche Holding AG climbed after the U.S. Food and Drug Administration gave a priority review for its Covid-19 drug Roactemra. Futures on the S&P 500 and Nasdaq 100 slipped. Futures on the S&P 500 and Nasdaq 100 edged lower.
Treasuries dipped on the prospect of sharp Federal Reserve interest-rate hikes to fight inflation. WTI crude oil climbed above $100 a barrel as traders weighed threats to demand from China’s Covid outbreak and moves to tap strategic reserves to enhance supply and curb elevated energy costs.
The Treasury yield curve is flashing more warnings that economic growth will slow as the Fed raises rates to tame inflation stoked in part by commodities. The two-year U.S. yield has exceeded the 30-year for the first time since 2007, joining inversions on other parts of the curve.
The Fed minutes later this week will shape views on the odds of a half percentage-point rate increase in May and provide key details on how the central bank will shrink its balance sheet.
“It would not be surprising to see yields rise further from here and it is very hard to know where they will land,” Angela Ashton, founder and director of investment consulting firm Evergreen Consultants, wrote in a note. “Markets are volatile and there is every chance they will overshoot.”
New York Fed President John Williams said Saturday a “sequence of steps” can get rates back to more normal levels. Mary Daly, president of the San Francisco Fed, said in an interview published Sunday that rising inflation and a tight labor market strengthen the case for a half-point May hike.
Chinese tech shares in Hong Kong climbed over 4% after Beijing sought to modify a rule that restricts offshore-listed firms from sharing sensitive financial data with foreign regulators. That may allow the U.S. to gain full access to audits, reducing the risk of Chinese firms losing Wall Street listings.
Key events to watch this week:
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Reserve Bank of Australia rate decision, Tuesday
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Fed Governor Lael Brainard speaks, Tuesday
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Federal Reserve minutes, Wednesday
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China Caixin composite and services PMI, Wednesday
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EIA crude oil inventory report, Wednesday
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Philadelphia Fed President Patrick Harker speaks, Wednesday
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St. Louis Fed’s James Bullard, Atlanta Fed’s Raphael Bostic, Chicago Fed’s Charles Evans speak at separate events, Thursday
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Reserve Bank of India rate decision, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 was little changed as of 8:22 a.m. London time
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Futures on the S&P 500 fell 0.1%
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Futures on the Nasdaq 100 fell 0.1%
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Futures on the Dow Jones Industrial Average fell 0.1%
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The MSCI Asia Pacific Index rose 0.8%
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The MSCI Emerging Markets Index rose 1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1035
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The Japanese yen was little changed at 122.58 per dollar
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The offshore yuan was little changed at 6.3718 per dollar
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The British pound rose 0.1% to $1.3128
Bonds
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The yield on 10-year Treasuries advanced one basis point to 2.39%
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Germany’s 10-year yield declined one basis point to 0.55%
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Britain’s 10-year yield declined one basis point to 1.60%
Commodities
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Brent crude rose 1.3% to $105.70 a barrel
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Spot gold rose 0.2% to $1,928.95 an ounce
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