Stocks Mixed, U.S Futures Fall on Fed, Russia: Markets Wrap

(Bloomberg) — Stocks were mixed and U.S. equity futures slid Tuesday as investors weighed concerns about tightening monetary policy and geopolitical tension.

European equities rebounded from their worst drop since June 2020 after robust results from telecom equipment maker Ericsson AB and luxury watchmaker Swatch Group AG. An Asia-Pacific share gauge tumbled as Japan’s Topix entered a correction and China’s CSI 300 was close to entering a bear market.

Contracts on the S&P 500 and Nasdaq 100 fell about 1%, after wild swings on Wall Street. The Cboe Volatility Index, known as the VIX, rose for a sixth session on Tuesday. It briefly jumped to the highest since October 2020 on Monday before receding.

Volatility is hitting markets ahead of a key Federal Reserve meeting Wednesday, with U.S.-Russia tension over Ukraine also buffeting sentiment. Global equities at one point wiped almost $3 trillion on Monday, with the S&P 500 down more than 10% from a record high, before a dramatic reversal saw major U.S. benchmarks end in the green.

Yield on 10-year Treasuries fell, while the dollar was steady. Oil stabilized after getting swept up in the bout of risk aversion.

Elsewhere too, rate-hike worries were in focus. In Australia, bonds slid after stronger-than-expected inflation data, while Singapore’s dollar strengthened after surprise monetary-policy tightening in the country.

Global shares are enduring their worst month since the pandemic roiled markets. The question facing investors is whether the slide is a buying opportunity or portends wider stress across more asset classes.

“Volatility is back,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said on Bloomberg Television. “We’re having a sea-change in terms of Fed policy. Equity investors frankly have been behind the curve in anticipating what’s coming, so there’s a lot of catch-up to do.”

Russia Tension

In the latest development over Ukraine, where Russian troops are massing on the nation’s borders, the U.S. is putting as many as 8,500 troops on heightened alert for deployment to bolster NATO forces in Eastern Europe if needed. Russia has denied it intends to invade.

The market “is obviously getting a little bit jittery about what could happen, whether a military altercation might happen, and what it means for” U.S. sanctions on Russia, Lale Akoner, senior market strategist at BNY Mellon Investment Management, said on Bloomberg Television. She expects the tension to be resolved through a deal rather than conflict.

Elsewhere, Bitcoin resumed its retreat amid weakness across a range of cryptocurrencies.

For more market analysis, read our MLIV blog.

What to watch this week:

IMF launches the World Economic Outlook update Tuesday.
U.S. Conference Board consumer confidence Tuesday.
Fed monetary policy decision Wednesday.
EIA crude oil inventory report Wednesday.
U.S. new home sales, wholesale inventories Wednesday.
South African Reserve Bank rate decision Thursday.
U.S. initial jobless claims, durable goods, GDP Thursday.
Euro zone economic confidence, consumer confidence Friday.
U.S. consumer income, University of Michigan consumer sentiment Friday.

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.5% as of 8:35 a.m. London time
Futures on the S&P 500 fell 1.4%
Futures on the Nasdaq 100 fell 1.9%
Futures on the Dow Jones Industrial Average fell 0.8%
The MSCI Asia Pacific Index fell 1.5%
The MSCI Emerging Markets Index fell 1.1%

Currencies

The Bloomberg Dollar Spot Index rose 0.1%
The euro fell 0.2% to $1.1300
The Japanese yen was little changed at 113.86 per dollar
The offshore yuan was little changed at 6.3315 per dollar
The British pound was little changed at $1.3481

Bonds

The yield on 10-year Treasuries declined two basis points to 1.75%
Germany’s 10-year yield advanced one basis point to -0.09%
Britain’s 10-year yield advanced two basis points to 1.15%

Commodities

Brent crude rose 0.6% to $86.78 a barrel
Spot gold was little changed

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