September 28, 2022
  • September 28, 2022

Stocks and Treasury Yields Rise as Crude Oil Climbs: Markets Conclude

By on September 5, 2022 0

Equities in Asia rose on Tuesday with U.S. equity futures amid a falling dollar, a break from the austere sentiment prevailing in markets as central banks tighten monetary policy.

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(Bloomberg) – Equities in Asia rose on Tuesday along with U.S. equity futures amid a falling dollar, a break from the austere sentiment prevailing in markets as central banks tighten monetary policy.

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Stocks rose in Japan, Australia and South Korea. S&P 500 futures rose before trading resumed on Wall Street after a holiday. Treasuries dipped on the curve, taking the 10-year yield to 3.21%.

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Crude soared to around $89 a barrel after OPEC+ agreed to cut 100,000 barrels a day in October. Gas prices surged in Europe on Monday, hurting stocks in the region, following Russia’s decision to keep a key pipeline offline.

The dollar gauge retreated, with the British pound and commodity-linked currencies leading the gains. The euro also found some relief after hitting a two-decade low earlier on Europe’s energy woes.

The offshore yuan strengthened following China’s announcement of a reduction in the amount of foreign currency deposits that banks must hold as reserves. Chinese authorities also plan to speed up the recovery, stepping up support for an economy struggling with Covid lockdowns, a housing crisis and power shortages.

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The next leg of a wave of monetary tightening is expected in Australia, where economists expect the central bank to raise the policy rate by another 50 basis points. Tighter global financial conditions have weighed on stocks and bonds in recent weeks. The episodes of investor calm have tended to run out of steam.

“A lot of customers ask, have we seen the bottom yet and are we going into a global recession?” Grace Tam, chief investment adviser at BNP Paribas Wealth Management Hong Kong, said on Bloomberg Television. “We think the risk of a global recession, particularly next year, is actually quite high” and that the energy crisis “is not fully priced in” to markets, she said. .

Britain’s new Prime Minister Liz Truss has drawn up plans to peg the annual electricity and gas bills of a typical British household at or below the current level of £1,971 ($2,300). The policy could cost up to £130billion over the next 18 months.

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Elsewhere, Bitcoin rallied back to the $20,000 level and gold made gains.

What to watch this week:

  • Australian rate decision, Tuesday
  • Apple event set to showcase new iPhones and Watches on Wednesday
  • Bank of England Governor Andrew Bailey at the Treasury Committee on Wednesday
  • Fed Regional Economic Activity Beige Book, Wednesday
  • Cleveland Fed President Loretta Mester is scheduled to speak on Wednesday
  • European Central Bank rate decision on Thursday
  • Fed Chairman Jerome Powell speaks at a Cato Institute conference in Washington on Thursday
  • Reserve Bank of Australia Governor Philip Lowe speaks at an event on Thursday
  • China PPI, Overall Funding, Money Supply, New Yuan Lending, Friday
  • Extraordinary meeting of EU energy ministers on the emergency response to electricity markets, Friday

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Some of the major movements in the markets:

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  • S&P 500 futures were up 0.8% from Friday at 10:10 a.m. in Tokyo. The S&P 500 fell 1.1% on Friday
  • Nasdaq 100 futures rose 1% from Friday The Nasdaq 100 fell 1.4% on Friday
  • Japan’s Topix index gained 0.4%
  • Australia’s S&P/ASX 200 index rose 0.4%
  • South Korea’s Kospi index rose 0.5%
  • Euro Stoxx 50 futures climbed 0.3%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%
  • The euro was at $0.9968, up 0.4%
  • The Japanese yen was at 140.31 to the dollar, up 0.2%
  • The offshore yuan was at 6.9365 to the dollar, up 0.1%

Obligations

  • The yield on 10-year US Treasuries rose two basis points to 3.21%
  • The Australian 10-year bond yield was 3.65%

Goods

  • West Texas Intermediate crude was at $89.10 a barrel, up 2.6% from Friday
  • Gold was at $1,720.09 an ounce, up 0.6%

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