Markets opened the week on a cautious note as investors readied for central bank updates on the outlook for interest rates and braced for a deluge of earnings. Oil prices rose amid escalated Middle East tensions.
Europe’s Stoxx 600 index held near the highest level since January 2022, supported by rallying energy shares. Futures contracts for the S&P 500 and the Nasdaq 100 were steady. Stocks in Asia gained on optimism over China’s latest measures to bolster its equity market.
Brent and West Texas Intermediate crude gained for a fourth day, rising to their highest levels since November in intraday trading. The US said Iranian-backed militants killed three service members, with President Joe Biden pledging to retaliate. Oil had climbed on Friday after Houthi rebels attacked a vessel carrying Russian fuel.
Rising Middle East tensions add to an already crowded diary of major events for investors this week, with a Federal Reserve policy decision Wednesday, one from the Bank of England Thursday, and US payroll numbers Friday. There’s a blockbuster line-up of earnings too, with Apple Inc., Microsoft Corp. and Google parent Alphabet Inc. among those due to report.
In Monday’s company news, Holcim Ltd. gained after the world’s largest cement maker said it plans to spin off its fast-growing North American business. Royal Philips NV fell 6% following news it’s suspending sales of sleep apnea devices and ventilators in the US. Bayer AG slumped after its Monsanto unit was ordered by a Pennsylvania jury to pay more than $2.2 billion to a former user of the Roundup weedkiller. Ryanair Holdings Plc dropped after trimming its profit guidance.
The dollar was steady, while US Treasury yields edged lower.
In China, the securities regulator said at the weekend it will halt the lending of certain shares for short selling from Monday. The new initiative adds to measures taken in recent weeks to halt a slide in the nation’s stocks that has seen the MSCI China Index tumble about 60% from a February 2021 peak.
“The very poor sentiment leading to this could potentially open the door for some technical rebound” in Chinese shares, said Homin Lee, a senior macro strategist at Lombard Odier, speaking on Bloomberg Television. “We’re slightly more cautious because what’s really needed is a change in the inflation outlook for the country and the overall sentiment in the private sector.”
A gauge of mainland China shares listed in Hong Kong jumped as much as 2.1% before trimming gains. Mainland equities mostly failed to match the advance in their Hong Kong peers, amid concern over a proposal requiring US cloud firms to reveal foreign clients developing AI applications.
Chinese property shares erased an earlier gain after a Hong Kong court ordered the liquidation of China Evergrande Group. Trading in the company’s shares was suspended after it tumbled 21%.
No change in policy is expected from the Fed on Wednesday, according to Win Thin, global head of currency strategy at Brown Brothers Harriman.
“The discussions about slowing and eventually ending quantitative tightening are likely to continue but we believe it is too early to announce any changes at this meeting,” he wrote in a note. “Risks for the dollar remain skewed to the upside this week as there is room for fed funds future pricing to converge toward the FOMC’s projections.”
Key events this week:
Some of the main moves in markets:
Stocks
Currencies
Cryptocurrencies
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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