Stocks rise, futures steady; crude extends rally: markets wrap

Gold was at $1 928.18 an ounce.
Image: Kiyoshi Ota/Bloomberg

Stocks rose Thursday in the wake of reassuring comments on monetary-policy tightening from Federal Reserve Chair Jerome Powell, while crude oil extended gains sparked by Russia’s invasion of Ukraine.

Japan spurred a climb in an Asian share index, while European and US futures were steady in the slipstream of broad rallies for the S&P 500 and Nasdaq 100.

Powell in testimony to US lawmakers backed a measured Fed interest-rate liftoff and vigilance on inflation, while indicating the world’s biggest economy can weather higher borrowing costs.

The sanctions imposed on Russia for the invasion have caused traders to back away from its resources, stoking fears of shortfalls in energy, grains and metals. Oil hit the highest since 2008 and a commodity index is at a record.

Haven demand triggered by the war moderated. Bonds in Australia retreated, while Treasuries edged up but pared only part of the sharp losses they suffered Wednesday. The US 10-year yield — at about 1.85% — remains below the 2% levels seen before Russia’s action. The dollar and gold were little changed.

Powell voiced support for a quarter-point Fed rate hike later this month. He also indicated the central bank may have to take tougher action if price pressures don’t start to ease. The bond market expects about five quarter-point moves this year.

The Fed chair managed to “appease risk-markets by ruling out a 50 basis-points hike in March, while simultaneously promising inflation vigilance at following meetings,” Citigroup Inc. strategists William O’Donnell and Edward Acton wrote in a note.

Monetary authorities appear intent on pushing ahead with tighter policy, while keeping a wary eye on the Russia-Ukraine war and its implications.

“It’s really time for investors to be prepared for more volatility, especially in the bond markets” as the Fed has yet to commence balance-sheet reduction, Nancy Davis, chief investment officer at Quadratic Capital Management LLC, said on Bloomberg Television.

Russia’s ostracism continues: MSCI Inc. and FTSE Russell are cutting Russian equities from widely-tracked indexes, isolating the stocks from a large segment of the investment-fund industry.

Russia’s credit rating was cut to junk by Moody’s Investors Service and Fitch Ratings amid doubts about its capability and willingness to service debt.

What to watch this week:

  • ECB publishes the account of its February meeting, Thursday
  • Eurozone Markit services PMI, PPI, unemployment, Thursday
  • US factory orders, initial jobless claims, U.S. durable goods, Thursday
  • US unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.1% as of 7:07 a.m. in London. The S&P 500 rose 1.9%
  • Nasdaq 100 futures shed 0.1%. The Nasdaq 100 rose 1.7%
  • Japan’s Topix index rose 1.2%
  • Australia’s S&P/ASX 200 index gained 0.5%
  • South Korea’s Kospi index rose 1.6%
  • Hong Kong’s Hang Seng index advanced 0.5%
  • China’s Shanghai Composite index fell 0.1%
  • Euro Stoxx 50 futures fell 0.1%

Currencies

  • The Japanese yen was at 115.68 per dollar, down 0.1%
  • The offshore yuan was at 6.3216 per dollar
  • The Bloomberg Dollar Spot Index rose 0.1%
  • The euro was at $1.1104, down 0.1%

Bonds

  • The yield on 10-year Treasuries fell three basis points to 1.85%
  • Australia’s 10-year yield rose nine basis points to 2.17%

Commodities

  • West Texas Intermediate crude rose 3.6% to $114.56 a barrel
  • Gold was at $1 928.18 an ounce
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