US Stocks, Treasuries Steady Before Warsh and CPI: Markets Wrap

(Bloomberg) — US stocks steadied as traders refrained from making big bets ahead of a jam-packed day that will see the unofficial start of the earnings season, along with testimony from Fed Chair Kevin Warsh and US inflation data.

S&P 500 futures were little changed. Technology stocks got a lift, with South Korea’s memory giants rebounding and Nasdaq 100 contracts rising 0.5%. Brent crude climbed above $86 a barrel to the highest level in a month as the US and Iran grew increasingly hostile over the status of the Strait of Hormuz.

Higher crude prices kept bets on a July US interest rate increase in place, with swap markets signaling a 45% chance of a hike when the Federal Reserve meets later this month. The yield on two-year UK gilts hit the highest level since May. Treasuries wavered and the dollar fell.

The event-filled calendar will see JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group Inc. and Bank of America Corp. report second-quarter earnings before the US market opens. The June consumer price report is expected to show some relief after inflation accelerated rapidly from March through May. Warsh is scheduled to testify before Congress hours later.

“Geopolitics on the margin is a negative, but the oil price has not spiked dramatically,” said Richard Flax, chief investment officer at Moneyfarm. “I expect Warsh will give a sort of data-driven speech rather than say too much about forward guidance. For us, it’s more about the inflation data.”

In Europe, Ericsson AB’s shares fell as much as 10% after warning that margins in its main networks business will come under pressure. The Stoxx 600 slid 0.7%, dragged down by the travel and leisure sector, alongside weakness in media and consumer-orientated shares.

Money markets see at least one Bank of England and one European Central Bank rate hike this year, with around an 80% chance of a second by December.

In a sign of confidence that the artificial-intelligence buildout will keep on fueling demand for chips, people familiar said Samsung Electronics Co. is exploring a potential offering of American depositary receipts. Semiconductor stocks bounced in US premarket trading after Monday’s rout.

“This suggests that the Nasdaq could break its short-term negative correlation with the oil price, and rise alongside energy prices if this continues,” wrote Kathleen Brooks, research director at XTB.

While economists surveyed by Bloomberg expect the consumer price index to notch its first monthly decline since the onset of the pandemic in 2020, the trajectory could reverse if the current bump in crude is sustained. The annual reading is expected to remain far above the Fed’s target of 2%.

In an escalation of the standoff between the US and Iran over the Strait of Hormuz, President Donald Trump reinstated the blockade of Iranian ships transiting the waterway and demanded a 20% reimbursement for all other cargo. US forces also completed another round of strikes against the Islamic Republic.

“We know the market can sustain far higher oil prices and US stocks keep rising,” said Alpesh Patel, managing partner at RootBridge Capital. “The only thing that matters is any indication rates are going to rise.”

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 fell 0.7% as of 10:18 a.m. London time S&P 500 futures were little changed Nasdaq 100 futures rose 0.4% Futures on the Dow Jones Industrial Average fell 0.3% The MSCI Asia Pacific Index rose 0.3% The MSCI Emerging Markets Index was little changed Currencies

The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.2% to $1.1400 The Japanese yen rose 0.1% to 162.23 per dollar The offshore yuan was little changed at 6.7803 per dollar The British pound rose 0.2% to $1.3376 Cryptocurrencies

Bitcoin rose 0.7% to $62,609.73 Ether rose 1.2% to $1,786.41 Bonds

The yield on 10-year Treasuries was little changed at 4.62% Germany’s 10-year yield advanced one basis point to 3.12% Britain’s 10-year yield advanced five basis points to 5.02% Commodities

Brent crude rose 3.7% to $86.39 a barrel Spot gold rose 0.4% to $4,019.14 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from James Hirai.

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