European markets were in the green as the latest round of peace talks began in Turkey on Monday. Photo: Ty O’Neil/SOPA Images/LightRocket via Getty
European markets started the week in the green as oil prices fell after parts of Shanghai entered a phased lockdown and Ukraine and Russia begin their latest round of peace talks in Turkey on Monday.
The FTSE 100 (^FTSE) surged 0.5% at the open as investors listened to a speech by Bank of England Governor Andrew Bailey on Monday.
Elsewhere in Europe, France’s CAC (^FCHI) was up 0.9% after the opening bell and the DAX (^GDAXI) was up 1.3% in Germany.
Ukrainian President Volodymyr Zelenskyy said he was ready to discuss “neutrality” in order to reach a peace deal with the Kremlin when the war enters a second month.
Crude oil prices fell on Monday after China, the world’s largest oil importer, announced a phased lockdown in key financial and manufacturing city Shanghai.
Brent Crude (BZ=F) fell 3.7% to $116.17 a barrel. US Light Crude Oil (CL=F) was down 4.3% in electronic trading on the New York Mercantile Exchange at the time of writing to $108.98.
The main benchmark, Brent, slipped 3.4% to $116.17 a barrel in early trading in London on Monday. Chart: Yahoo Finance UK
Across the pond, US benchmarks were mixed on Friday as traders grapple with the twin issues of inflation and the pace of Federal Reserve rate hikes.
Wall Street’s S&P 500 (^GSPC) rose 22.90 points, or 0.5%, to 4543.06. The index extended gains to 8.1% over the past two weeks, the sharpest gain since 2020. The tech-heavy Nasdaq (^IXIC) shed 0.2%. The Dow Jones (^DJI) ended the week up 0.3%, gaining 0.4% on Friday.
Futures for the S&P 500 (ES=F) fell 0.4%. Nasdaq 100 index (NQ=F) futures fell 0.5% and Dow Jones futures (YM=F) fell 0.4% as government bonds tumbled.
The yield on the benchmark 10-year bond (^TNX), a measure of future interest rates that moves inversely with its price and underpins borrowing costs globally, rose 2.5% above a technical threshold that has recently been capped 1980s.
Meanwhile, the 5-year bond yield rose above the 30-year as a key portion of the Treasury bond curve inverted for the first time since 2006. The move suggests that investors are concerned about the risk of an economic downturn as monetary policy tightens.
The story goes on
Richard Hunter, Head of Markets at Interactive Investor, said: “In the US, inflation numbers and monthly nonfarm payrolls data should underscore the Federal Reserve’s current focus on the former, with the latter now pointing to an economy approaching full employment.
“Indeed, after some digested the initial rate hike, some are now calling for a more aggressive approach by the Fed to combat rising inflation. The possibility of a 0.5% hike at the May and June sessions is now growing.
“From the Fed’s perspective, this remains a difficult balancing act. The economy appears to be on a recovery path, but the US Treasury yield curve is nearing inversion. which could lead to an unwanted Fed-induced recession.”
President Joe Biden is expected to announce a tax on billionaires in America as part of his 2023 budget later Monday.
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Overseas markets were mixed overnight as the lockdown in Shanghai, a key financial and manufacturing hub, dampened sentiment in Asia. The MSCI’s broadest index of Asia-Pacific ex-Japan stocks fell 1.1%.
The Shanghai Composite (000001.SS) fell 0.2%, the Nikkei (^N225) was over 0.7% lower in Japan, while the Hang Seng (^HSI) climbed 0.9% higher in Hong Kong.