US Stocks Drift as $100 Brent Lifts Inflation Risk: Markets Wrap
(Bloomberg) — US stock futures struggled for direction in a market where inflation risks are the primary focus, with Brent crude topping $100 a barrel.
S&P 500 contracts were little changed. Nasdaq 100 futures trimmed gains of as much as 0.3%, echoing a rally in Asian technology shares that lost some momentum as the session progressed. In Europe, sectors sensitive to the economy dragged the Stoxx 600 down 0.8%.
Oil prices extended gains for a fourth day. In the latest escalation in the Middle East, US forces destroyed five Iranian tankers carrying crude in response to two attempts to hit a US Navy warship with ballistic missiles. Tehran responded by firing missiles at Jordan and warning ships in the Persian Gulf.
Treasuries edged lower across the curve, with the 10-year yield up one basis point to 4.80%, hovering near a 2023 high. Traders are waiting for the Treasury Department to announce the size of Thursday’s buyback operation for outstanding 10-year and 20-year bonds, part of Treasury Secretary Scott Bessent’s efforts to restrain US yields.
“Oil prices at $100 per barrel put inflation pressures back into the spotlight,” said Joachim Klement at Panmure Liberum. “In this environment and in the absence of forward guidance by the Fed, the ECB’s decision and Christine Lagarde’s comments on Thursday will gain weight. We expect stock markets to adopt a wait-and-see position today.”
The yen strengthened for a third day after Bessent challenged traders to test his resolve to boost Japan’s currency. The yen advanced 0.3% to 153.59 per dollar, while Bloomberg’s gauge of the greenback was little changed.
What Bloomberg Strategists Say:
“The cross-asset reaction to oil topping $100 has been muted thus far with only a marginal tick lower in Treasuries and European government bonds. The economic impact of a few additional cents to breach $100 is limited. The risks lie further ahead if the higher prices translate into the second-round effects that central bankers are much more interested in.”
Corporate News:
Amazon.com Inc. kicked off the sale of its debut sterling bonds, with a four-part deal expected to be delivered later on Wednesday. Alphabet Inc.’s Google is planning its biggest investment in Europe, an artificial intelligence infrastructure build out worth at least €13 billion ($15.1 billion) in Finland. Inditex SA sales continued to grow at a strong clip at the start of the third quarter, signaling that the Zara owner is reeling in shoppers. Kioxia Holdings Corp.’s top executive brushed aside the likelihood of deeper ties with rival and stakeholder SK Hynix Inc., while pledging to keep surging memory prices at bay to avoid denting long-term AI demand. Apple Inc. is set to debut a roughly $2,000 foldable iPhone Duo on Wednesday as part of a wide-ranging product event. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.8% as of 9:46 a.m. London time S&P 500 futures were little changed Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average fell 0.1% The MSCI Asia Pacific Index rose 0.3% The MSCI Emerging Markets Index rose 0.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1636 The Japanese yen rose 0.3% to 153.59 per dollar The offshore yuan was little changed at 6.7066 per dollar The British pound was little changed at $1.3546 Cryptocurrencies
Bitcoin rose 1.5% to $79,662.67 Ether rose 1.4% to $2,518.42 Bonds
The yield on 10-year Treasuries advanced one basis point to 4.80% Germany’s 10-year yield advanced two basis points to 3.39% Britain’s 10-year yield advanced two basis points to 5.20% Commodities
Brent crude rose 2.2% to $100.09 a barrel Spot gold rose 1% to $4,400.30 an ounce This story was produced with the assistance of Bloomberg Automation.
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