(Bloomberg) — Bonds and U.S. stock futures pared losses after a measure of manufacturing inflation showed price pressures easing.
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S&P 500 contracts and Treasury yields remained unchanged after an index of producer prices unexpectedly fell for a third straight month in December. Compared to the previous year, the index rose by 1%, while the core indicator recorded the smallest increase since the end of 2020.
Results from some of the biggest banks had pushed futures to session lows as executives made negative comments. Citigroup Inc.'s CEO called it a “very disappointing” fourth quarter, while Bank of America Corp. said its trading revenues were hit by persistently high interest rates and geopolitical tensions.
However, JPMorgan Chase & Co. reversed a premarket decline, rising 1.7% after forecasting stronger growth in net interest income.
An otherwise optimistic outlook for markets in 2024 is complicated by a decline in corporate profits and the threat of a major Middle East war that has triggered a spike in oil inflation. West Texas Intermediate crude oil prices rose as much as 4.5% after the launch of joint military strikes by the US and its allies against Houthi rebels in Yemen.
“There's a lot of positives priced in,” Julian Emanuel, chief equity and quantitative strategist at Evercore ISI, said in an interview with Bloomberg TV. “If you look at the last 24 hours, the consumer price index was higher than expected, we had military operations last night which provided significant support to oil prices. And if you look at those, it’s going to make the Fed’s job a lot more difficult.”
Expectations that officials will finish raising interest rates and ease policy in 2024 remain after faster-than-expected U.S. inflation data on Thursday.
The story goes on
Crude oil price gains also impacted commodity-linked currencies, including the Canadian dollar and the Norwegian krone. Europe's Stoxx 600 rose as much as 1%, lifted by energy companies TotalEnergies SE and Shell Plc.
Some of the key moves in the markets:
Shares
S&P 500 futures were little changed at 8:43 a.m. New York time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average fell 0.3%
The Stoxx Europe 600 rose 0.7%
The MSCI World Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.2% to $1.0954
The British pound was little changed at $1.2751
The Japanese yen rose 0.2% to 144.96 per dollar
Cryptocurrencies
Bitcoin fell 1.2% to $45,620.78
Ether rose 2.8% to $2,677.44
Tie up
The yield on 10-year government bonds remained little changed at 3.97%
The 10-year German government bond yield fell five basis points to 2.19%
The 10-year UK government bond yield fell four basis points to 3.81%
raw materials
West Texas Intermediate crude oil prices rose 3.1% to $74.27 a barrel
Spot gold rose 1.2% to $2,053.43 an ounce
This story was produced with support from Bloomberg Automation.
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