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Stocks Fall, US Futures Wobble on Economic Jitters: Markets Wrap

Treasury yields fell, while US stock-index futures struggled for direction, amid concern hawkish policies by global central banks are raising the risk of a recession and earnings contraction. The pound traded firmer after the UK withdrew a plan to abolish the top income-tax rate.

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(Bloomberg) — Treasury yields fell, while US stock-index futures struggled for direction, amid concern hawkish policies by global central banks are raising the risk of a recession and earnings contraction. The pound traded firmer after the UK withdrew a plan to abolish the top income-tax rate.

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The December contract on the S&P 500 Index was little changed while similar futures on the Nasdaq 100 were down 0.3%. The 10-year Treasury yield shed 5 basis points. European stocks dropped as the region’s energy crisis escalated. Oil jumped on signals the OPEC+ alliance may opt for a production cut. Credit Suisse Group AG’s shares hit record low as traders continued to speculate about its future. A Brazil-linked exchange-traded fund rallied in Paris after the nation’s presidential race went into a run-off.

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Global markets are in jitters over the impact of monetary tightening on the economy after central banks including the Federal Reserve reiterated their resolve to contain runaway inflation. US stocks posted their third straight quarter of losses for the first time since 2009 since the Federal Reserve delivered a third jumbo hike last month. Traders now await US jobs data later this week to gauge the path of the economy and Fed policy.

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The pound and shares of Credit Suisse were in focus when European trading opened. The British currency, which had extended gains amid expectations of a roll-back in the government’s fiscal plans, gave up some of those gains when the announcement eventually came. it still traded 0.3% higher against the dollar, extending a rally to a fifth day.

Investors also waited to see how Brazil-linked assets move after the country’s presidential election headed to a run-off vote on Oct. 30. An early indication came from the Lyxor MSCI Brazil ETF in Paris, which jumped the most since July 7. 

Credit Suisse fell 9% in Zurich even after Chief Executive Officer Ulrich Koerner asserted the bank has a strong capital base. Speculation about the company’s future and its requirement for fresh capital continued to mount.

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Global inflation fears were further stoked as oil surged above $82 a barrel on indications that the OPEC+ alliance is considering slashing production by more than 1 million barrels a day when it meets this week. 

Equities made small gains in Japan and dropped in Hong Kong and Australia. Trading in Asia was muted with a week-long closure of Chinese markets for Golden Week, and holidays in South Korea and Sydney. 

Investors now await the jobs data this week for further clues about the Fed’s rate-hike trajectory. Upcoming inflation and GDP readings will also provide details on whether price pressures are easing meaningfully. Rate decisions in Australia and New Zealand are also expected, with these economies considered bellwethers for developed market peers. 

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Key events this week:

  • Eurozone manufacturing PMIs, Monday
  • US construction spending, ISM Manufacturing, light vehicle sales, Monday
  • Fed’s Raphael Bostic, John Williams speak at events, Monday
  • Euro-area and EU finance ministers meet, Monday
  • Eurozone PPI, Tuesday
  • US factory orders, durable goods, Tuesday
  • Fed’s John Williams, Lorie Logan, Loretta Mester, Mary Daly speak at events, Tuesday
  • Eurozone services PMIs, Wednesday
  • OPEC+ meeting begins, Wednesday
  • Fed’s Raphael Bostic speaks, Wednesday
  • Eurozone retail sales, Thursday
  • US initial jobless claims, Thursday
  • Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
  • US unemployment, wholesale inventories, nonfarm payrolls, Friday
  • BOE Deputy Governor Dave Ramsden speaks at event, Friday
  • Fed’s John Williams speaks at event, Friday

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Key market moves:

Stocks

  • The Stoxx Europe 600 fell 1% as of 8:34 a.m. London time
  • Futures on the S&P 500 were little changed
  • Futures on the Nasdaq 100 fell 0.3%
  • Futures on the Dow Jones Industrial Average rose 0.2%
  • The MSCI Asia Pacific Index fell 0.3%
  • The MSCI Emerging Markets Index fell 0.7%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%
  • The euro rose 0.1% to $0.9816
  • The Japanese yen fell 0.1% to 144.92 per dollar
  • The offshore yuan was little changed at 7.1486 per dollar
  • The British pound rose 0.4% to $1.1215

Cryptocurrencies

  • Bitcoin fell 0.1% to $19,209.75
  • Ether fell 0.8% to $1,292.38

Bonds

  • The yield on 10-year Treasuries declined five basis points to 3.78%
  • Germany’s 10-year yield advanced one basis point to 2.12%
  • Britain’s 10-year yield declined nine basis points to 4.01%

Commodities

  • Brent crude rose 3.6% to $88.17 a barrel
  • Spot gold rose 0.2% to $1,663.33 an ounce

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