Stocks Climb as Traders Track Israel’s Offensive: Markets Wrap

(Bloomberg) — Stocks climbed as appetite for riskier assets recovered after Israel’s military action in Gaza proceeded more cautiously than some investors had feared.

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Europe’s Stoxx 600 index and S&P 500 futures rose 0.6%. The Wall Street gauge fell on Friday, with sentiment dented by worries including a persistently hawkish Federal Reserve and underwhelming corporate earnings. Brent crude oil dropped below $89 a barrel on Monday, while gold slipped below $2,000 an ounce. Ten-year Treasury yields edged higher to 4.85%.

Instead of a massive ground invasion, the Israeli military has started slowly, taking a day-by-day approach. Away from developments in the war, the week includes a slew of potentially market-moving events for investors to track, including central bank meetings in Japan, the US and the UK, while the US Treasury Department announces its quarterly bond sales plan.

“The market’s worst fears around Middle East developments so far have not materialized despite Israel stepping up operations over the weekend,” said Eddie Cheung, a strategist at Credit Agricole. “The Fed meeting this week may not spring as much of a surprise but there is potential for more rate volatility this week ahead of US Treasury refunding announcements.”

HSBC Holdings Plc was steady after the bank’s further share buyback of as much as $3 billion offset news of a pretax profit of $7.71 billion that fell short of analyst estimates.

In Asia, a gauge of the region’s stocks edged lower. Meanwhile, the Shanghai Composite Index and China’s CSI Index rose for a fifth day. In China’s EV sector, Great Wall Motor jumped 7.7% in Hong Kong after stronger-than-expected results.

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The global stock market has lost $12 trillion in value since the end of July as concern mounts that central banks’ “higher-for-longer” interest-rate policies may tip the global economy toward a recession. The S&P 500 entered a technical correction on Friday amid rising volatility and hotter inflation numbers, with the benchmark closing 10% below a recent peak.

Morgan Stanley strategist Michael Wilson said investors hoping for a boost to stocks by the end of the year will be disappointed.

“Chances of a fourth-quarter rally have fallen considerably,” said Wilson, who was once again named as the best portfolio strategist by the latest Institutional Investor survey. “Narrowing breadth, cautious factor leadership, falling earnings revisions and fading consumer and business confidence tell a different story than the consensus, which sees a rally into year-end.”

The VIX index, known as Wall Street’s fear gauge, has risen to above 21 from around 13 in mid-September, but remains below its mid-20s March highs when the collapse of several regional banks set off a market rout.

Wednesday’s Treasury Department bond sales announcement will be a focus for investors. The contents of the plan may determine whether 10-year Treasury yields have the momentum to keep rising after surging to a 16-year high last week. Friday brings a US payroll report that may show job and wage growth slowed last month.

Key events this week include:

• China’s key financial policy gathering day, a rare closed door event led by Chinese President Xi Jinping, starts Monday

• Japan unemployment, industrial production, retail sales, Tuesday

• Bank of Japan rate decision, Tuesday

• China non-manufacturing PMI, manufacturing PMI, Tuesday

• Eurozone CPI, GDP, Tuesday

• US construction spending, ISM Manufacturing, job openings, Wednesday

• US Treasury quarterly refunding announcement, Wednesday

• Federal Reserve rate decision, Wednesday

• Bank of England rate decision, Thursday

• China Caixin services PMI, Friday

• Eurozone unemployment, Friday

• US unemployment, nonfarm payrolls, Friday

Here are some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.7% as of 8:17 a.m. London time

• S&P 500 futures rose 0.6%

• Nasdaq 100 futures rose 0.8%

• Futures on the Dow Jones Industrial Average rose 0.5%

• The MSCI Asia Pacific Index fell 0.2%

• The MSCI Emerging Markets Index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.1% to $1.0551

• The Japanese yen was little changed at 149.58 per dollar

• The offshore yuan was little changed at 7.3301 per dollar

• The British pound fell 0.2% to $1.2098

Cryptocurrencies

• Bitcoin fell 0.9% to $34,262.46

• Ether fell 0.3% to $1,792.43

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.85%

• Germany’s 10-year yield declined five basis points to 2.78%

• Britain’s 10-year yield declined three basis points to 4.52%

Commodities

• Brent crude fell 1.6% to $89.05 a barrel

• Spot gold fell 0.6% to $1,993.75 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael G. Wilson, Ye Xie, Matthew Burgess and Robert Brand.

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