European markets began the week green as oil prices fell after parts of Shanghai were blocked and Ukraine and Russia began their latest peace talks in Turkey on Monday.
The FTSE 100 (^ FTSE) rose 0.5% as investors were paying attention to a speech from Bank of England Governor Andrew Bailey on Monday. British Prime Minister Rishi Sunak is also facing lawmakers on the Spring statement.
Sterling (GBPUSD = X) lost ground against a safe shelter dollar prior to two major speeches. It fell 0.2% to $ 1.315, down 0.3% against the euro (GBPEUR = X).
Elsewhere in Europe, France’s CAC (^ FCHI) was up 1.5% and DAX (^ GDAXI) was up 1.7% in Germany.
“The FTSE 100 will focus on new peace talks between Russia and Ukraine, at least in the hope that there will be a move towards ending the fighting,” said Russ Mold, investment director at AJ Bell. I like it. ” However, it seems impossible to have existed before the aggression, and the effects of the conflict are almost certain to continue whenever it ends. “
Ukraine’s President Volodymyr Zelensky said he was ready to discuss a “neutral country” to secure a peace agreement with the Kremlin as the war entered its second month.
Crude oil prices fell on Monday after China, the world’s largest oil importer, announced a gradual blockade of its major financial and manufacturing city, Shanghai.
Brent crude (BZ = F) fell 3.8% to $ 116.03 a barrel (£ 88.19). US light crude oil (CL = F) was $ 109.03 at the time of writing, down 4.2% in electronic trading on the New York Mercantile Exchange.
Neil Wilson, chief market analyst at Markets.com, said the oil market and other commodities “continue to be sensitive headlines” during the Ukrainian war.
“Last week’s peace talks revealed growing concerns about tight spot markets and a renewed sharp backwardation on the futures curve.”
Benchmarks in the United States were mixed across the pond on Friday as traders tackled two issues: inflation and the speed of the Fed’s interest rate hikes.
Wall Street’s S & P 500 (^ GSPC) rose 22.90 points (0.5%) to 4543.06. The index has expanded its rise over the past two weeks to 8.1%, making it the strongest move since 2020. %. Dow Jones (^ DJI) closed the week 0.3% higher, adding 0.4% on Friday.
S & P 500 (ES = F) futures fell 0.4%, Nasdaq 100 index (NQ = F) futures fell 0.5%, and Dow Jones futures (YM = F) fell 0.4% on Monday as government bonds fell. It has fallen.
Yields on benchmark 10-year bonds (^ TNX), which are inversely proportional to price, surged 2.5% above the technical threshold that has served as the upper bound since the late 1980s. This is an indicator of future interest rates and is the cost of borrowing worldwide.
On the other hand, for the first time since 2006, the yield curve of 5-year bonds exceeded 30 years as an important part of the reversal of the government bond curve. This move suggests that investors are concerned about the risk of a recession as a monetary policy. Tighten.
Richard Hunter, Market Head of Interactive Investor, said: Full employment.
“Sure, after digesting the initial rise in interest rates, some are now calling for a more aggressive approach from the Fed to tackle rising inflation. At both May and June meetings. The possibility of a 0.5% increase is increasing.
“From the Fed’s point of view, this is still a difficult balancing act. The economy seems to be on a recovery track, but the US Treasury yield curve is approaching a reversal. This is an over-hiking rate. It means concern that there may be a shoot, which can lead to an unwanted recession triggered by the Fed. “
It’s coming because President Joe Biden is expected to announce a wealth tax for US millionaires later on Monday as part of his 2023 budget plan.
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Overseas markets were disrupted overnight as the blockade of Shanghai, a major financial and manufacturing hub, weakened the mood of Asia. The widest index of MSCI Asia Pacific equities, excluding Japan, fell 1.1%.
The Shanghai Composite (000001.SS) fell 0.2%, the Nikkei (^ N225) fell more than 0.7% in Japan, and the Hang Seng (^ HSI) rose 0.9% in Hong Kong.