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(Bloomberg) – Tech companies led the gains in equities as bond traders scaled back aggressive bets on Federal Reserve hikes amid speculation that inflation could be near a peak. Investors also weighed the start of the earnings season against geopolitical risks.

The S&P 500 halted a three-day decline, while the tech-heavy Nasdaq 100 climbed 2%. Two-year Treasury yields – which are more sensitive to impending monetary policy decisions – tumbled, taking this week’s decline to 16 basis points. The loonie rose after the Bank of Canada raised its interest rate by half a percentage point in its biggest increase in more than two decades. Oil was trading above $100 a barrel.

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Bond yields fell even after data showed prices paid to U.S. producers jumped the most, beating all estimates. This contrasts with the last consumer price report, which showed a slowing in the pace of underlying inflation. For analysts, the big moves on the front end of the Treasury market reflect the easing of bets on how much the Fed will tighten policy in the current economic cycle.

“US stocks are rebounding as the bond market sell-off appears to be over for now,” said Edward Moya, senior market analyst at Oanda. “The Fed’s rate hike expectations will be tested in the coming months, and many traders are concerned that geopolitical and inflationary risks will force them to be less aggressive with monetary tightening later this year.”

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Earnings Highlights:

JPMorgan Chase & Co.’s first-quarter results were marred by a $524 million loss from market fallout from Russia’s invasion of Ukraine. prices, soaring inflation and war in Europe. Delta Air Lines Inc. said a strong rebound in summer travel bookings will help the carrier weather rising fuel costs and a slow return to business travel. Retailer Bed Bath & Beyond Inc. blamed global supply chain headwinds for an unexpected loss and a bigger-than-expected drop in sales.

Read: JPMorgan raises reserves amid growing possibility of recession

Earnings season “has the potential to be a mess,” said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, citing “a myriad of headwinds” facing companies. But she also sees the potential for this “not to be as bad as expected, given the likelihood of buy-side expectations being well below official sell-side forecasts – so long as strong appetite/market ratings underlying demand remain in place.

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“We’ve finally launched our earnings and we have a little idea of ​​what we want to focus on,” said Shawn Cruz, director of derivatives strategy at TD Ameritrade. “It’s really going to be how inflation – whatever the cause, whether it’s supply chain issues from China or commodity issues that seem to be happening everywhere – how it affects business.”

Traders also watched the latest geopolitical developments, with President Joe Biden saying the United States would increase the size and range of weapons it provides to Ukraine under a new military assistance program by $800 million. This includes heavy artillery systems and armored personnel carriers – signaling a more intense engagement than the nation has already taken – as well as additional artillery shells and helicopters.

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Events to watch this week:

ECB rate decision, ThursdayBank of Korea monetary policy decision, ThursdayU.S. retail sales, initial claims for unemployment insurance, business inventories, consumer sentiment from the University of Michigan, Thursday Loretta Mester, president of the Fed of Cleveland, Patrick Harker, president of the Philadelphia Fed, must take the speak Thursday in the United States. stock and bond markets are among those closed for Good Friday

Some of the major movements in the markets:

Shares

The S&P 500 rose 1.2% at 3:19 p.m. PT The Nasdaq 100 rose 2.1% The Dow Jones Industrial Average rose 1% The MSCI World Index rose 1%

Currencies

The Bloomberg Dollar Spot Index fell 0.3% The euro rose 0.6% to $1.0888 The British pound rose 0.9% to $1.311 The Japanese yen fell 0.2% at 125.65 to the dollar

Obligations

The 10-year Treasury yield fell two basis points to 2.70% Germany’s 10-year yield fell two basis points to 0.77% The Great Britain 10-year yield -Brittany was little changed at 1.80%

Merchandise

West Texas Intermediate crude rose 3.7% to $104.33 a barrelGold futures rose 0.2% to $1,980 an ounce

©2022 Bloomberg LP

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