Bonds, Stocks Decline as Iran Sustains Attacks: Markets Wrap
(Bloomberg) — Turmoil in the Middle East sparked fresh losses across stocks and bond markets. The dollar strengthened. The UK 10-year yield hit the highest level since 2008.
US stocks are heading for a fourth week of declines as investors, many of whom expected a short war, grapple with a conflict that has upended energy supply chains and reignited fears over inflation. S&P 500 futures fell 0.3%. Two-year Treasury yields added five basis points to 3.84%. Brent traded around $107 a barrel.
Iran pressed ahead with attacks on Gulf states even after Israel signaled it would refrain from hitting the Islamic Republic’s energy operations. Meanwhile, Axios reported that the US is considering taking over Iran’s Kharg Island, a key oil-export site, to put pressure on Tehran to reopen the Strait of Hormuz.
US equity traders are also bracing for an unusually large tally of options expiring on Friday. Roughly $5.7 trillion in notional options tied to individual stocks, indexes and exchange-traded funds are set to expire, the largest March expiry in Citigroup Inc. data going back to 1996.
“We’re in a vulnerable environment at the moment with possible interest-rate hikes and Brent above $100,” said Nicolas Forest, chief investment officer at Candriam in Brussels. “If the Stoxx 600 and the S&P 500 are not able to hold technical levels today, this might signal upcoming stress.”
Europe’s Stoxx 600 trimmed earlier gains of 1%. The yield on 10-year UK gilts rose as much as 10 basis points to 4.94%, the highest since the financial crisis. Shorter-dated yields surged even more. Money markets are fully pricing in three interest-rate hikes by the Bank of England and the European Central Bank for 2026.
Gold steadied above $4,650 an ounce, but remained on track for its worst weekly drop since the onset of the pandemic. Bullion is down nearly 7% this week, the most since March 2020, as traders dialed down expectations for central bank rate cuts.
Long-only investors sold $9.6 billion across Goldman Sachs Group Inc.’s trading floor on Thursday, the largest day of net selling in the investment bank’s data set going back to 2022. The supply was broad and across all sectors, team members Ariana Contessa and Mike Washington wrote in a note.
“The market was wrong at the start of the conflict, thinking it would end swiftly,” said David Kruk, head of trading at La Financiere de l’Echiquier in Paris. “Investor sentiment has clearly shifted into a more bearish positioning.”
Corporate News:
FedEx Corp. shares rose 6.7% in premarket trading after the courier raised its full-year profit forecast, signaling that the firm’s plan to restructure its delivery network is gaining traction. Unilever Plc is in talks to sell its food business to McCormick & Co., in what would be the biggest overhaul of the owner of Hellmann’s mayonnaise since it was founded almost a century ago. Novartis AG agreed to buy an experimental breast cancer drug from Synnovation Therapeutics for as much as $3 billion to bolster its oncology pipeline. ByteDance Ltd. has agreed to sell games unit Moonton to Savvy Games Group for $6 billion, unloading a gaming studio it acquired just a few years ago to focus on generative AI. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.3% as of 8:29 a.m. New York time Nasdaq 100 futures fell 0.4% Futures on the Dow Jones Industrial Average fell 0.3% The Stoxx Europe 600 rose 0.3% The MSCI World Index rose 0.1% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.1% to $1.1576 The British pound fell 0.2% to $1.3398 The Japanese yen fell 0.5% to 158.56 per dollar Cryptocurrencies
Bitcoin was little changed at $70,452.38 Ether fell 0.2% to $2,143.01 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.29% Germany’s 10-year yield was little changed at 2.96% Britain’s 10-year yield advanced eight basis points to 4.93% Commodities
West Texas Intermediate crude fell 1.3% to $94.30 a barrel Spot gold rose 0.7% to $4,681.46 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from James Hirai, Neil Campling and Jan-Patrick Barnert.
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