(Bloomberg) — Stocks fell, pressured by rising Treasury yields and signs that company earnings were set to disappoint. A gauge of the dollar climbed to the highest this month.
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European shares declined for a fifth straight session as bond yields jumped amid concerns of persistently high inflation as well as the impact of hawkish central bank policies on global growth. The Stoxx Europe 600 Index dropped 0.6%, with futures on the S&P 500 down by about the same magnitude, pointing to another risk-off day on Wall Street.
The mood is fragile ahead of Thursday’s US inflation data, with the case for another 75 basis-point rate hike likely to be strong if the reading comes in higher than than forecast. Fed officials until now show little sign they are in a mood to pause the rate-hiking cycle despite the potential hit to economic growth.
“There is evidence inflation is stabilizing but the question is whether inflation has peaked or is just pausing before another leg higher,” said Michael Hewson, chief analyst at CMC Markets in London. “Rates markets are reflecting that uncertainty.”
In bond markets, yields on two-year Treasuries rose to the highest since 2007 while the 30-year yield surged to the highest since 2014. With world growth under pressure, oil prices slipped around 1%, giving up more of last week’s 17% rally.
Big US banks kick off the third-quarter earnings season in earnest later this week as strategists brace for weak profits against a drumbeat of warnings over the rising risk of a global recession.
Britain has also become a point of concern, as the Bank of England was forced to expand its emergency measures to tackle what it called “fire-sale dynamics.” Ten-year UK government yields which had risen more than 50 basis points since Oct. 4, dropped as much as 4 basis points to 4.43%.
Meanwhile, Russian President Vladimir Putin threatened further missile attacks on Ukraine after hitting Kyiv and other cities in the most intense barrage of strikes since the first days of its invasion.
“It’s little wonder investors enter the week in a dreary mood, especially with headlines from Ukraine signaling a further escalation in geopolitical tensions,” Christopher Smart, chief global strategist at Barings, said in a note.
Key events this week:
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Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
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IMF’s World Economic Outlook and Global Financial Stability Report, Tuesday
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Fed’s Loretta Mester speaks, Tuesday
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BOE’s Andrew Bailey speaks, Tuesday
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FOMC minutes for September meeting, Wednesday
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US PPI, mortgage applications, Wednesday
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OPEC Monthly Oil Market Report, Wednesday
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Fed’s Michelle Bowman and Neel Kashkari speak
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ECB’s Christine Lagarde speaks
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US CPI, initial jobless claims, Thursday
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G-20 finance ministers and central bankers meet, Thursday
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China CPI, PPI, trade, Friday
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US retail sales, business inventories, University of Michigan consumer sentiment, Friday
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BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.6% as of 9:19 a.m. London time
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Futures on the S&P 500 fell 0.6%
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Futures on the Nasdaq 100 fell 0.5%
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Futures on the Dow Jones Industrial Average fell 0.6%
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The MSCI Asia Pacific Index fell 2%
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The MSCI Emerging Markets Index fell 1.9%
Currencies
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro rose 0.1% to $0.9712
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The Japanese yen rose 0.1% to 145.56 per dollar
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The offshore yuan fell 0.4% to 7.1824 per dollar
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The British pound fell 0.2% to $1.1035
Cryptocurrencies
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Bitcoin fell 0.6% to $19,121.44
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Ether fell 1.6% to $1,286.91
Bonds
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The yield on 10-year Treasuries advanced six basis points to 3.94%
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Germany’s 10-year yield declined five basis points to 2.29%
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Britain’s 10-year yield declined eight basis points to 4.39%
Commodities
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