Stocks Rise, Crude Drops as U.S. Taps Supplies: Markets Wrap

Article content

(Bloomberg) — European stocks and U.S. equity futures rose slightly as investors evaluated the economic outlook amid moderating oil prices, tightening Federal Reserve monetary policy and Russia’s war in Ukraine.

Stocks are coming off their worst quarter since the pandemic bear market. Energy shares fell as oil retreated on a move by the U.S. to release 1 million barrels a day for six months from reserves to tackle rising costs. Russia’s invasion has disrupted commodity flows, stoking fuel and food prices.

Article content

Government bond yields rose and the curve between two-year and 10-year Treasuries yields remained close to inverting, a pattern that signals worries about an economic downturn if the Fed uses aggressive interest-rate hikes to damp high inflation.

The yen fell and a dollar gauge rose. Attention will turn to U.S. payrolls figures later Friday as traders assess the strength of the U.S. economy and the case for Fed tightening, reinforcing a divergence with Japan’s dovish monetary settings that’s weighed on the latter’s currency.

Investors begin a new quarter wondering if the fighting in Ukraine, the isolation of Russia and the Fed’s increasingly hawkish turn will engender still more volatility and losses for stocks and bonds. Raw materials are the only key asset class to deliver major gains so far in 2022.

Article content

Downgraded growth outlooks in the U.S., Europe and China are “something to watch very carefully,” Anwiti Bahuguna, head of multi-asset strategy at Columbia Threadneedle Investments, said on Bloomberg Television. “There are very few places to hide these days in the multi-asset space,” though commodities are a good spot because of inflation and geopolitics, she added.

The latest data showed Asia’s manufacturing resurgence faltered in March, hampered by worsening supply shortages and soaring costs. In the U.S., the personal consumption expenditures price index — which the Fed uses for its inflation target — increased 6.4%, the most since 1982.

Talks between Russia and Ukraine are set to resume Friday, according to a Ukrainian official, although there has still been no verification of this from Moscow. President Vladimir Putin said the country would continue supplying gas to Europe, even as it demands customers pay in rubles.

Article content

The Russian government has so far stayed current on its debt obligations. JPMorgan Chase & Co. Thursday processed a nearly $447 million payment for dollar debt due in 2030. Another deadline is approaching on April 4.

European Union leaders plan to tell President Xi Jinping in a virtual summit that China will hurt its global stature if it hands Russia an economic or military lifeline. 

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. jobs report, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.2% as of 8:19 a.m. London timeFutures on the S&P 500 rose 0.4%Futures on the Nasdaq 100 rose 0.4%Futures on the Dow Jones Industrial Average rose 0.3%The MSCI Asia Pacific Index fell 0.7%The MSCI Emerging Markets Index fell 0.7%

Currencies

The Bloomberg Dollar Spot Index rose 0.1%The euro was little changed at $1.1061The Japanese yen fell 0.7% to 122.61 per dollarThe offshore yuan was little changed at 6.3584 per dollarThe British pound fell 0.1% to $1.3123

Bonds

The yield on 10-year Treasuries advanced seven basis points to 2.41%Germany’s 10-year yield advanced six basis points to 0.61%Britain’s 10-year yield advanced seven basis points to 1.68%

Commodities

Brent crude fell 1.7% to $102.91 a barrelSpot gold fell 0.4% to $1,930.57 an ounce

©2022 Bloomberg L.P.

Bloomberg.com