Equity Futures Bounce, Yen Slips as Syria Assessed: Markets Wrap

Adam Haigh
A pedestrian looks at an electronic stock board outside a securities firm in Tokyo, Japan, on Tuesday, Feb. 6, 2018. Japan’s blue-chip Nikkei 225 Stock Average entered a correction as the nation’s shares posted the biggest decline since November 2016, following U.S. peers lower amid rising concern that inflation will force interest rates higher. Photographer: Noriko Hayashi/Bloomberg

U.S. and Japanese stock-index futures bounced and the yen slipped as traders bet a wider fallout from an American-led strike on Syria can be contained. Gold declined.

Risk appetite returned Monday morning as investors assessed the impact of geopolitical tensions in the Middle East. The yen declined amid international reaction to the Syrian strike, even as polls showed falling support for Japanese Prime Minister Shinzo Abe’s government. The dollar edged lower as CFTC data showed hedge funds are the most bearish on the greenback in five years.

U.S. President Donald Trump declared “mission accomplished” via Twitter on Saturday, a day after the U.S., France and the U.K. launched military strikes in response to Syrian leader Bashar al-Assad’s suspected chemical attack on civilians. While geopolitical concern linger, focus this week is back on earnings season in the U.S. and a slew of Federal Reserve officials who are due to speak, including the incoming head of the New York Fed, John Williams.

More from Bloomberg.com: Warship Ruse and New Stealth Missiles: How the U.S. and Allies Attacked Syria

“Horrific as the events in Syria are, we just don’t think that they will impact markets for long,” said Stewart Richardson, London-based chief investment officer at RMG Wealth Management LLP.

Elsewhere, the flattening yield curve in the bond market remains a key topic of debate. The spread between two- and 10-year Treasuries dipped to 45.3 basis points Friday, the narrowest since October 2007.

Terminal users can read more in our markets live blog.

Here’s what to watch out for this week:

  • Goldman Sachs Group Inc. and Morgan Stanley among companies reporting results
  • John Williams, soon to be president of the New York Fed, speaks on economic outlook in Madrid on Tuesday.
  • China GDP and Japanese inflation are the featured data points in Asia.
  • Trump welcomes Japan Prime Minister Shinzo Abe to Mar-a-Lago on Tuesday. North Korea and trade will probably be discussed.
  • Mining investors will get to take the pulse of the global industry this week, with Vale, Rio Tinto and BHP offering quarterly production reports.

Here are the main moves in markets:

Stocks

  • Futures on Japan’s Nikkei 225 Stock Average rose 0.6 percent as of 8 a.m. in Tokyo.
  • Futures on the S&P 500 Index gained 0.7 percent. The underlying gauge fell 0.3 percent Friday.
  • The MSCI All-Country World Index gained 1.6 percent last week, the biggest advance since the week ending March 9.

Currencies

  • The Japanese yen declined 0.2 percent to 107.54 per dollar.
  • The euro was little changed at $1.2332.
  • The British pound increased less than 0.1 percent to $1.4243.
  • The Bloomberg Dollar Spot Index rose less than 0.1 percent. It fell 0.5 percent last week.

Bonds

  • The yield on 10-year Treasuries fell two basis points to 2.82 percent.
  • The Australian 10-year bond yield rose more than one basis point to 2.75 percent.

Commodities

  • West Texas Intermediate crude lost 0.4 percent to $67.15 a barrel.
  • Gold slipped 0.3 percent to $1,342.55 an ounce.

More from Bloomberg.com

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