Stocks get off to a cautious start to an eventful week: Markets wrap

(Bloomberg) — Markets opened the week on a cautious note as investors braced for central bank updates on interest rate forecasts and braced for a deluge of earnings. Oil prices rose amid escalating tensions in the Middle East.

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The European Stoxx 600 index held near the highest level since January 2022, supported by a rise in energy stocks. S&P 500 and Nasdaq 100 futures were flat. Stocks rose in Asia on optimism over recent measures taken by China to boost the stock market.

Brent and West Texas Intermediate crude oil rose for the fourth day, rising to their highest levels since November in intraday trading. The United States said Iranian-backed militants killed three service members, and President Joe Biden vowed revenge. Oil prices rose on Friday after Houthi rebels attacked a ship carrying Russian fuel.

Rising tensions in the Middle East add to an already crowded diary of major events for investors this week, with a Federal Reserve policy decision on Wednesday, a decision from the Bank of England on Thursday, and US payrolls figures on Friday. There's also a big pool of profits, with Apple Inc. and Microsoft Corp. and Alphabet Inc, the parent company of Google. are among those scheduled to report.

In company news on Monday, Holcim Ltd. Shares rose after the world's largest cement maker said it plans to spin off its fast-growing North American business. Royal Philips NV shares fell 6% after news of the suspension of sales of ventilators and sleep ventilators in the United States. Bayer AG backed down after a Pennsylvania jury ordered its Monsanto unit to pay more than $2.2 billion to a former user of the weedkiller Roundup. Ryanair Holdings Plc shares fell after cutting its earnings guidance.

The dollar stabilized, while US Treasury yields fell.

In China, the securities regulator said over the weekend that it would stop lending some stocks to short-sellers starting Monday. The new initiative is in addition to measures taken in recent weeks to halt the decline in Chinese stocks, which has seen the MSCI China Index decline by about 60% from its peak in February 2021.

“The very bad sentiment that led to this could open the door to some technical recovery” in Chinese stocks, Humin Li, chief strategist at Lombard Odier, told Bloomberg TV. “We are a bit more cautious because what we really need is a change in the country's inflation expectations and overall sentiment in the private sector.”

A gauge of mainland Chinese stocks listed in Hong Kong jumped as much as 2.1% before paring gains. Most mainland stocks failed to match the progress of their Hong Kong counterparts, amid concerns over a proposal requiring US cloud companies to disclose foreign clients developing artificial intelligence applications.

Chinese real estate stocks erased previous gains after a Hong Kong court ordered the liquidation of China Evergrande Group. Trading in the company's shares was halted after they declined by 21%.

No policy change is expected from the Fed on Wednesday, according to Win Thien, global head of currency strategy at Brown Brothers Harriman.

“Discussions about slowing and eventually ending quantitative tightening are likely to continue, but we believe it is too early to announce any changes at this meeting,” he wrote in a note. “Dollar-related risks remain skewed to the upside this week as there is room for future federal funds pricing to converge to FOMC expectations.”

Main events this week:

Retail sales in Australia, Tuesday
Eurozone economic confidence, GDP, consumer confidence, Tuesday
ECB Governing Council members Boris Vujicic and Philip Lane speak on Tuesday
United States Conference. Consumer Confidence Council, Tuesday
Microsoft, Alphabet to announce earnings, Tuesday
Australian Consumer Price Index, Wednesday
Japanese industrial production, retail sales, Wednesday
China Non-Manufacturing PMI, Manufacturing PMI, Wednesday
French Consumer Price Index, Wednesday
German CPI, Unemployment, Wednesday
European Central Bank chief economist Philip Lane speaks on Wednesday
Fed interest rate decision, US labor cost index, Wednesday
Boeing announced earnings on Wednesday
Quarterly redemption of US Treasury bonds, Wednesday
Japan Purchasing Managers' Index, Thursday
China Caixin Manufacturing PMI, Thursday
Eurozone S&P Global Manufacturing PMI, CPI, Unemployment, Thursday
Bank of England interest rate decision, Thursday
European Central Bank Governing Council member Mario Centeno speaks on Thursday
US ISM Manufacturing Index, Initial Jobless Claims, Thursday
Apple Inc., Amazon.com Inc., MetaPlatforms Inc. To announce earnings, Thursday
ECB Governing Council member Mario Centeno speaks on Friday
US Employment Report, University of Michigan Consumer Confidence, Factory Orders, Friday

Some key movements in the markets:

Stores

The Stoxx Europe 600 index was little changed as of 8:20 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures rose 0.2%
Dow Jones Industrial Average futures were little changed
The MSCI Asia Pacific Stock Index rose 1%.
The MSCI Emerging Markets Index rose 0.7%.

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro fell 0.2 percent to $1.0835
The Japanese yen rose 0.2 percent to 147.86 yen to the dollar
There was little change in the yuan in external transactions at 7.1900 to the dollar
There was little change in the pound sterling at $1.2709