U.S. Futures Steady as Oil Rises on Russia Tension: Markets Wrap
- Oil up on Russia sanctions risk; Aussie surges in wake of RBA
- Yen climbs after BOJ governor says recent moves somewhat rapid
Stocks in Asia wavered Tuesday and crude oil climbed as investors evaluated the prospect of tougher sanctions against Russia for alleged atrocities during the war in Ukraine.
Shares were mixed in Japan and fluctuated in South Korea, where faster inflation added to the case for more interest-rate hikes. U.S. and European futures were steady after the technology sector boosted Wall Street Monday.
Oil advanced on renewed fears about supply disruptions due to the war. The European Union is working on new Russian sanctions, while the U.S. said it may impose further penalties this week. Russia rejected allegations of war crimes.
Treasuries retreated, with the spotlight remaining on inverted yield curves. The latter point to an economic downturn should the Federal Reserve deliver a series of aggressive rate rises to quell price pressures.
Australia’s dollar strengthened and the nation’s sovereign bonds fell as the central bank left borrowing costs unchanged but jettisoned a reference to being patient over tighter policy.
Market moves are continuing to be shaped by the ramifications of the conflict and tightening monetary settings as raw-material costs stoke inflation. The Fed minutes later this week will guide expectations for how rapidly the U.S. central bank will increase rates and reduce its bond holdings.
“Between now and June we’re going to get a lot of information the market has to price in,” Subadra Rajappa, head of U.S. rates strategy at Societe Generale SA, said on Bloomberg Television. “In that sort of context, the bias is potentially towards higher yields and flatter curves.”
In the latest step to punish Russia, dollar debt payments from Russian government accounts at U.S. financial institutions have been halted, according to a person with knowledge of the matter.
Russia will instead have to choose between draining dollar reserves held within its borders, spending new revenue it collects, or going into default, the official said, asking not to be identified.
Elsewhere, the yen strengthened against the dollar following comments from Bank of Japan Governor Haruhiko Kuroda, who said its current moves are somewhat rapid. The yen is this year’s weakest performer in the Group-of-10 basket.
Markets are closed for holidays in Hong Kong and China. Shanghai reported over 13,000 daily Covid cases for the first time amid a sweeping lockdown.
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Key events to watch this week:
- Reserve Bank of Australia rate decision Tuesday
- Fed Governor Lael Brainard speaks Tuesday
- Federal Reserve minutes Wednesday
- China Caixin composite and services PMI Wednesday
- EIA crude oil inventory report Wednesday
- Philadelphia Fed President Patrick Harker speaks Wednesday
- St. Louis Fed’s James Bullard, Atlanta Fed’s Raphael Bostic, Chicago Fed’s Charles Evans speak at separate events Thursday
- Reserve Bank of India rate decision Friday