December 3, 2022

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Wall Street refocuses on risks as stocks fall and oil prices rise

Wall Street refocuses on risks as stocks fall and oil prices rise

  • US stocks were mixed after volatile European shares traded
  • Fighting continues to rage in Ukraine, some indication of progress
  • Crude oil prices jump as EU weighs Russian embargo
  • Fed Chair Powell expected to repeat hawkish view

BOSTON (Reuters) – U.S. stock indexes fell broadly on Monday, giving up some of last week’s gains and oil prices jumping as investors refocused on risk as the conflict in Ukraine continued.

Dow Jones Industrial Average (.DJI) The index fell 186.13 points, or 0.54 percent, to 34568.8 points, and the Nasdaq Composite (nineteenth) It fell 4.79 points, or 0.03%, to 13,889.04 points, while the Standard & Poor’s 500 . declined (.SPX) It was almost flat.

Boeing (ban) Shares fell about 4 percent after the crash of one of its 737 planes in China. Read more

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Global stocks rose last week in anticipation of a final peace deal on Ukraine, but it will likely take actual progress to justify further gains.

Turkey’s foreign minister said on Sunday that Russia and Ukraine were close to an agreement on “critical” issues and hoped for a ceasefire if the two sides did not back down from the progress made so far. Read more

Ukraine on Monday defied a Russian ultimatum that its forces laid down their weapons before dawn in Mariupol, as the European Union was about to consider a potential energy embargo on Russia. Read more

“The coming days will be a critical test of whether last week’s risk rebound has been overblown. Hopes for a peaceful resolution in Ukraine have relied more on the headlines than on the evidence,” said ING’s Francesco Pesol and Chris Turner.

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MSCI World Stock Index (.MIWD00000PUS.) It was 0.05% higher than at 1540 GMT. European stocks were volatile with STOXX 600 across the region (.stoxx) The benchmark index rose 0.21%.

The war in Ukraine, soaring commodity prices, supply chain issues, and tightening policies have made investors less optimistic about global earnings growth prospects.

Last week’s BofA survey of global fund managers was bearish biased with cash levels the highest since April 2020 and the global growth outlook the lowest since the 2008 financial crisis. Longer oil and tradable commodities have been the busiest and most vulnerable to declines. Read more

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Bond investors braced for more hawks from the US Federal Reserve as President Jerome Powell spoke on Monday and other Fed members during the week.

Policy makers have signaled a series of future rate hikes to move the money rate anywhere from 1.75% to 3.0% by the end of the year. The market is indicating a 50-50 chance of a half point hike in May and a higher chance by June.

Atlanta Fed President Rafael Bostick said Monday that he has decided to raise interest rates eight times for this year and next, fewer than most of his colleagues because he is concerned about the effects of the Russian invasion of Ukraine on the US economy. Read more

The yield on the standard 10-year Treasury rose to 2.2445%, while the yield on the two-year Treasury rose to 2.03%. It was the first time since May 2019 that the two-year note, which is usually in line with interest rate expectations, exceeded 2% – the Fed’s target rate for inflation.

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Morgan Stanley interest rate strategists are calling for an inversion of the 2-year/10-year US Treasury yield curve in the second quarter. “While this does not guarantee a recession, the signal for growth is clearly negative,” they wrote in a note.

The dollar is little changed against a basket of major currencies, as investors look to the Federal Reserve’s official comments for insight on monetary policy. Read more

The dollar index settled at 98.21, surpassing its recent peak recorded earlier in March at 99.415. The euro settled at $1.104, after rising 1.3% last week.

In the commodity markets, gold failed to get much of a lift from safe haven flows or inflation fears, losing more than 3% last week. It last rose 0.6% on Monday to $1,933.44 an ounce.

Oil prices rose on Monday, after losing ground last week, as there was no easy alternative to Russian barrels in a tight market. Read more

Brent jumped five percent to 113.38 dollars, while US crude rose 4.47 percent to 109.38 dollars a barrel, after news that the European Union was considering joining the United States in a Russian oil embargo, while the weekend attack on Saudi oil facilities caused tension.

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Additional reporting by Lawrence Delevingne in Boston, Danilo Masoni in Milan and Wayne Cole in Sydney; Editing by Bernadette Bohm and Susan Fenton

Our criteria: Thomson Reuters Trust Principles.