(Bloomberg) — Stocks saw small moves and bonds held steady as escalating tensions in the Middle East put markets in a wait-and-see mode. Oil rose and gold hovered near a record.
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With traders awaiting Israel’s response to a barrage of missiles from Iran, and Brent crude above $75 a barrel, geopolitical fear has replaced optimism about an easing of central bank policy as the main engine for the market. The escalation in the region prompted a flight to safety on Tuesday and sent Wall Street’s fear gauge – the VIX – to a key level that usually signals more market swings are on the way.
Europe’s Stoxx 600 index was higher, led by energy companies 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. Government bond yields rose slightly, with the 10-year yield at around 3.76%. The dollar traded flat.
Hopes for monetary stimulus and a soft landing for the U.S. economy “could be further questioned if we see these escalations continue,” Laura Cooper, global investment strategist at Nuveen, told Bloomberg TV.
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Chinese shares listed in Hong Kong, meanwhile, rose the most in almost two years as Beijing followed other major cities in relaxing home buying rules. The massive stimulus efforts announced by Chinese leaders last week sent local assets soaring and helped lift markets abroad.
In European business news, JD Sports Fashion Plc fell after reporting results and after Nike Inc. reported a decline in quarterly sales after the closing of the US market. Oil producers and defense stocks rose as Israel vowed to retaliate against Iran after it fired about 200 ballistic missiles at Israel in a serious escalation of hostilities that has stoked fears of a war in the Middle East.
In addition, Republican JD Vance largely managed to soften 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.
Main events this week:
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S&P Global Manufacturing PMI on Wednesday
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Fed speakers include Thomas Barkin of Richmond, Beth Hammack of Cleveland, Alberto Musalem of St. Louis and Fed Governor Michelle Bowman on Wednesday
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U.S. Nonfarm Payrolls, Friday
Some of the major moves in the markets:
Stocks
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The Stoxx Europe 600 was little changed at 10.25am London time
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S&P 500 futures fell 0.3%
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Nasdaq 100 futures fell 0.3%
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Futures on the Dow Jones Industrial Average fell 0.4%
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The MSCI Asia Pacific Index rose 0.3%
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The MSCI Emerging Markets Index rose 1.2%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1065
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The Japanese yen fell 0.5% to 144.29 per dollar
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The offshore yuan was little changed at 7.0277 per dollar
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The British pound was little changed at $1.3284
Cryptocurrencies
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Bitcoin rose 1.2% to $61,544.65
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Ether rose 0.7% to $2,467.99
Bonds
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The yield on ten-year government bonds rose by three basis points to 3.76%
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The German ten-year yield rose by five basis points to 2.08%
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The British ten-year yield rose by seven basis points to 4.01%
Raw materials
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Brent crude rose 2.5% to $75.38 per barrel
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Gold fell 0.4% to $2,653.69 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Rob Verdonck.
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