2023-10-17 08:42:03
Stocks rose slightly and bond prices fell on Tuesday, as markets continued to retrace last week’s moves toward safe-haven assets, focusing on the outlook for corporate earnings and the resilience of the U.S. economy rather than on tensions in the Middle East.
Europe’s STOXX 600 index rose 0.25%, a second day of gains, following Asian stocks climbed earlier in the day, and the S&P 500 closed up 1% on Monday.
The moves marked something of a reversal following global stocks fell on Friday, with traders looking to reduce their risks heading into the weekend when geopolitical developments were possible when markets were closed.
In addition, a series of “favorable” signs, such as the strength of the U.S. consumer, economic growth and interest rates supporting bank profits, gave reason for hope, said Kerry Craig, market strategist global at JP Morgan Asset Management.
However, investors are also trying to assess the risks of a broader conflict erupting in the Middle East, which remains a “very fluid situation”, Kerry Craig said.
Benchmark 10-year bond yields in the United States and Germany rose 2-3 basis points following rising 5-8 basis points on Monday – bond yields move inversely to prices.
The yield on the 10-year Bund was 2.793% and the 10-year Treasury was 4.7375%, following falling 15 basis points last week – the biggest weekly decline since mid-July – and falling up to 4.53%, a sharp reversal from the 16-year high of 4.887% reached in early October.
“The basic theme in European debt markets appeared to be a reversal of the downward risk trend that predominated on Friday,” Rabobank strategists said in a note.
QUARTERLY RESULTS
Investors will be particularly interested in quarterly results from Goldman Sachs and Bank of America, following JPMorgan, Wells Fargo and Citigroup far exceeded expectations last Friday.
Morgan Stanley, pharmaceutical giant Johnson & Johnson, Tesla and Netflix are expected later in the week.
In the Middle East, US President Joe Biden will visit Israel on Wednesday, as the country prepares to step up its offensive once morest Hamas militants, raising fears of a wider conflict with Iran.
Iran’s foreign minister said Israel would not be allowed to act in Gaza without consequences, warning of “preventative action” by the “resistance front” in the coming hours.
The Israeli shekel remained on the weak side of the 4-to-the-dollar level it reached on Monday for the first time since 2015.
Russian President Vladimir Putin arrived in Beijing on Tuesday to meet Chinese President Xi Jinping, as the war in Ukraine rages.
The well-attended trip aims to highlight the “boundless” trust and partnership between the two countries, as Beijing strives to strengthen ties with the countries under its Belt and Road Initiative. focused on infrastructure.
However, Tuesday marks the end of a 30-day grace period for late payment from developer Country Garden, recalling problems in China’s real estate sector. If investors do not receive the coupon payment, all of Country Garden’s offshore debts will be considered in default.
In currency markets, the dollar index, which tracks the unit once morest six other currencies, was up 0.14% at 106.3, gaining on the euro, pound and the yen.
The Swiss franc was at 0.9509 per euro following the common currency fell 0.9% once morest the safe-haven currency on Friday, to 0.94975, its lowest level in a year.
Gold pulled away from Friday’s three-week high of $1,932.53 an ounce and held at $1,918.5 an ounce, and oil prices stabilized following sliding by more than a dollar on Monday, on hopes that the United States will ease sanctions on oil-producing Venezuela and that Washington will step up efforts to prevent an escalation of the war between Israel and Hamas.
Brent oil futures were up 0.1% at $89.70 a barrel.
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