US stocks rose, oil prices fell and Treasury bond yields hit their highest level in nearly three years as investors watched developments in Ukraine and anticipate a likely Federal Reserve rate hike this week.
The S&P 500 rose 0.5% on Monday. The underlying stock index has fallen four of the last five weeks. Investors were spooked by the war in Ukraine and the rise in commodity prices caused by the conflict, in addition to the prospect of higher rates. They moved into supposed safe havens such as gold by selling shares.
Investors said positive comments from both Ukrainian and Russian officials about the talks round spurred markets on Monday. The Dow Jones Industrial Average added 0.7%, while the technology-focused Nasdaq Composite added 0.2%.
The 10-year Treasury yield rose to 2.09% on Monday from 2.004% on Friday. Yields are moving in the opposite direction of bond prices and are on track for their highest close since July 2019.
“The main story today is mood music coming from Ukrainian and Russian negotiators,” said Edward Park, chief investment officer of Brooks Macdonald. “Expectations were pretty low late last week.”
“Of course, there is a risk of short-term instability if negotiations either stall or look like they are heading in the wrong direction,” he added.
The underlying S&P 500 has fallen in four of the last five weeks.
Photo: Spencer Platt/Getty Images
Apple shares fell 1.4% as the Covid-19 outbreak in China disrupted production at a key supplier in the city of Shenzhen. Occidental Petroleum fell 6.7%.
China’s Shanghai Composite fell 2.6% after Shenzhen closed due to the coronavirus. In Europe, the Stoxx Europe 600 rose 0.9% on shares in automakers and banks.
The lockdown could reduce demand for oil, with Brent oil futures falling 5.6% to $103.19 a barrel. A week ago, Brent oil prices hit $139 a barrel, the highest level since 2008, as the war in Ukraine disrupted global commodity markets.
In other commodities markets, trading in nickel remained suspended on the London Metal Exchange, which halted the market last week to contain a price spike.
Investors are paying attention to the Federal Reserve’s monetary policy meeting, which will end on Wednesday. The central bank is expected to raise its base rate for the first time since 2018 as officials seek to curb demand and control inflation. He navigates the unusually difficult environment of a tough job market, supply disruptions and, more recently, the war in Ukraine.
Despite hopes for negotiations, the conflict is escalating, and there are growing fears among officials and investors that the war could spill over beyond Ukraine. A Russian airstrike on a Ukrainian military training center near the border with Poland on Sunday killed 35 people. Russia has requested military equipment and other assistance from China for its war effort, according to US officials.
Commodity prices are hot right now. But the prices investors pay on the open market for commodities like coffee, copper, or corn may have little to do with the prices buyers pay in the store. Explains Dion Rabouin of the WSJ. Illustration: Adele Morgan
Email Joe Wallace at [email protected]
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