US Stocks Slide as Oil Advances Amid Rising Yields: Markets Wrap
(Bloomberg) — US stocks slipped as oil climbed amid increasing disruptions to energy markets from the war in the Middle East. The yield on 10-year Treasuries advanced for a fourth straight day.
Futures for the S&P 500 were 0.2% lower after swinging between gains and losses. The biggest upswing followed a report that Iran had told the US it was ready to relinquish its stockpile of highly enriched uranium in return for “something good.” The move faded in the absence of a signal from Washington.
Brent briefly pared an advance before resuming its climb above $83 a barrel. Earlier, Iran vowed to escalate its retaliation against US strikes. The dollar rose 0.2%. European stocks were little changed. A benchmark for Asian equities trimmed its rebound of as much as 3.8%.
Developments in the US-Israeli war against Iran are once again driving traders to curb risk after sentiment picked up in the previous session. Stress in energy markets is increasingly coming to the fore, with China seeking to conserve fuel and Japanese refiners calling for the release of strategic petroleum reserves.
While Iran military commander Amir Heydari told state TV on Thursday the vital Strait of Hormuz isn’t closed, traders and analysts still expect it will take weeks before oil flows can resume meaningfully.
“If it is blocked for more than a week, the risk of sustained high energy prices would become real,” said Roberto Scholtes, head of strategy at Singular Bank. “If it is resolved quickly, the economic and financial impact would likely be negligible.”
A global bond selloff showed no respite, with the 10-year Treasury yield up three basis points to 4.13%. Losses in Europe were steeper as Germany’s bunds headed for their worst week in a year. Gold climbed above $5,150 an ounce. Bitcoin traded near $73,000.
Traders continued to dial back expectations for Federal Reserve interest-rate cuts as inflation expectations build and data reinforce the resilience of the economy.
Layoff announcements at US companies subsided last month, data from outplacement firm Challenger, Gray & Christmas Inc. showed Thursday, adding to signs of a stabilizing labor market.
As of now, “macro expectations have not materially repriced,” said Francisco Simón, European head of strategy at Santander Asset Management. “The risk scenario would be a combination of higher energy prices and a visible slowdown in activity, which would complicate the policy outlook and weigh on risk assets.”
What Bloomberg strategists say…
“Stocks are likely to sell off hard again before the weekend. Extended disruption to the Strait of Hormuz will trigger an energy shock to much of the world, and just help us assess relative vulnerabilities. If shipping doesn’t restart in earnest soon, the incentives to reduce equity exposure will build into Friday’s close.”
— Mark Cudmore, MLIV Executive Editor. For full analysis, click here.
Corporate Highlights:
Broadcom Inc. rose more than 6% in premarket trading after Chief Executive Officer Hock Tan said the company expects its AI chip sales to top $100 billion next year. BlackRock Inc. slashed the value of a private loan to zero just three months after assessing it at 100 cents on the dollar, marking the second sudden wipeout to recently hit its private-credit division. The financial and logistical troubles the Iran war is causing for the global aviation industry are compounding by the day, with the number of canceled flights to Middle East hubs surpassing 23,000 since fighting began. Investors are boosting short positions in Blue Owl Capital Inc., betting the stock has more room to fall despite wiping out nearly one-third of its value this year. Anthropic PBC chief Dario Amodei has resumed discussions with the Pentagon about the way its AI models are used by the US military. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 7:51 a.m. New York time Nasdaq 100 futures fell 0.3% Futures on the Dow Jones Industrial Average fell 0.3% The Stoxx Europe 600 was little changed The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1613 The British pound fell 0.1% to $1.3359 The Japanese yen fell 0.3% to 157.48 per dollar Cryptocurrencies
Bitcoin fell 0.4% to $73,029.57 Ether fell 0.5% to $2,139.83 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.13% Germany’s 10-year yield advanced seven basis points to 2.82% Britain’s 10-year yield advanced seven basis points to 4.51% Commodities
West Texas Intermediate crude rose 2.9% to $76.84 a barrel Spot gold rose 0.4% to $5,162.43 an ounce This story was produced with the assistance of Bloomberg Automation.
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