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(Bloomberg) — Stocks fell and oil rose as optimism about a de-escalation of the war in Ukraine faded.
Europe’s Stoxx 600 snapped a three-day winning streak after surging to the highest level in five weeks on Tuesday. U.S. futures slipped amid warnings that gains of the past two weeks have the hallmarks of a bear-market rally.
A slide in long-end yields saw the two- to 10-year Treasury curve briefly invert — typically a signal of impending recession, though its accuracy is in doubt after years of heavy stimulus. The dollar slipped and the euro climbed to the highest in four weeks.
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The yen bounced from a six-year low and bonds rose after the Bank of Japan pledged to buy more securities than planned and include longer-dated debt.
Energy and commodity stocks advanced as investors remained circumspect about the chances of a resolution to the war. NATO allies are evaluating whether Russia’s promise to scale back military operations in Ukraine marks a turning point in the conflict or simply a tactical shift.
Germany activated an emergency plan to manage limited energy supplies, as concerns mount that Russia could shut off natural gas deliveries.
The rally in equities globally remains fragile as the war in Ukraine drags on, and analysts are skeptical of Russia’s intentions. The Treasury yield curve’s inversion is fanning debate over the risks of a growth downturn as central banks globally begin to withdraw stimulus. Money markets in the U.S. are pricing in two percentage points of additional interest-rate hikes this year.
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“The yield curve inversion needs to be sustained before it’s a predictor of anything,” Mariann Montagne, senior portfolio manager at Gradient Investments , said on Bloomberg Television. “We’ll have volatility both in the stock and the bond markets but we think that progression” on the cease-fire talks will lead to upward earnings revisions.
A lack of clarity on the cease-fire talks and supply-chain shortages will pose headwinds for the markets, she said.
Philadelphia Fed Bank President Patrick Harker said he expects a series of “deliberate, methodical” rate increases this year, but said he is open to a half-point move in May if near-term data shows more inflation.
Consumer sentiment appears resilient, as the latest U.S. confidence data suggest solid job growth has offset Americans’ concerns over accelerating inflation for now. Government data Friday are expected to show the economy probably added close to a half million jobs in March as the unemployment rate fell to 3.7%.
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Elsewhere, Chinese technology stocks pared gains after a Wall Street Journal report of new curbs in the live-streaming industry.
Just how frightening is yield-curve inversion? That’s the theme of the MLIV survey this week. Please click here to participate.
Some key events to watch this week:
U.S. GDP, WednesdayRichmond Fed President Thomas Barkin to speak, WednesdayChina manufacturing, non-manufacturing PMIs, ThursdayOPEC and non-OPEC ministerial meeting to discuss production targets, ThursdayNew York Fed President John Williams to speak, ThursdayU.S. jobs report, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.6% as of 8:30 a.m. London timeFutures on the S&P 500 fell 0.3%Futures on the Nasdaq 100 fell 0.3%Futures on the Dow Jones Industrial Average fell 0.2%The MSCI Asia Pacific Index rose 1.2%The MSCI Emerging Markets Index rose 1%
Currencies
The Bloomberg Dollar Spot Index fell 0.3%The euro rose 0.3% to $1.1118The Japanese yen rose 0.9% to 121.83 per dollarThe offshore yuan rose 0.2% to 6.3615 per dollarThe British pound rose 0.1% to $1.3111
Bonds
The yield on 10-year Treasuries declined one basis point to 2.38%Germany’s 10-year yield advanced three basis points to 0.66%Britain’s 10-year yield was little changed at 1.64%
Commodities
Brent crude rose 2.1% to $112.49 a barrelSpot gold rose 0.3% to $1,925.59 an ounce
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Dow Today – Stocks Fall, Oil Rises as Ukraine Concerns Return: Markets Wrap
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2022-03-30 07:34:42