Markets:
- WTI crude +1.4% to $92.99
- USD leads, CHF lags on the day
- Gold down 0.5% to $4,170
- European equities higher; S&P 500 futures +0.1%
- Bitcoin down 0.3% to $83,345
It was a quieter session in European morning trade today as broader markets have to contend with a US partial market holiday to start the new week.
The US bond market is closed in observance of Columbus day and while the stock market remains open, traders and investors are still missing one key piece of the puzzle in broader markets today. That is especially the case since surging Treasury yields have been a major driver of trading sentiment over the past few weeks.
As such, the absence of a key signal for broader markets is providing some room for a bit of a breather. But at the same time, thinner liquidity conditions could also lead to some exacerbated price moves as we get things going in the new week.
Oil prices were down early on but recovered well to be up over 1% on the day currently. Hopes of a Russia-Ukraine energy ceasefire helped to drag prices down in the early stages before the focus turned back towards tensions in the Middle East, where supply disruptions continue to weigh on the market mood. WTI crude was down to just under $90 earlier in the day but is trading back up to near $93 currently.
Meanwhile, the dollar is holding slightly firmer as it posts a light advance against the rest of the major currencies bloc. USD/JPY is up 0.2% to 158.60 while EUR/USD is down 0.2% to 1.1175, so the gains are not anything to shout about for the time being.
As for equities, European stocks are enjoying a modest start after a rough period in trading last week. While regional bond yields are still keeping the pressure on, investors are able to take some comfort from the broader market mood – at least for now. Looking to US futures, it’s a bit more of a mixed mood with tech shares sagging a little ahead of the open later. S&P 500 futures are up 0.1% while Nasdaq futures are down 0.2% so far on the day.
And in the commodities space, gold is also down 0.5% to $4,170 after another technical rejection from the $4,200-20 region once again.
Until the bond market returns tomorrow, I wouldn’t read too much into the market moves today. Thinner liquidity conditions could exaggerate price movements in the session ahead, making it harder to judge whether any of the moves have genuine conviction behind them.
The first thing to watch now will be how Treasury yields respond when trading resumes tomorrow. That should offer a better indication of whether the calmer mood today has any staying power, especially with inflation pressures and the Fed outlook still hanging over markets.
After which, the focus will quickly turn to the US CPI report on Wednesday to dictate how things might play out for the remainder of the week.
This article was written by Justin Low at investinglive.com.
