The S&P 500 and Stoxx 600 futures in Europe increased by almost 0.6%. The price of gold fell below $2,000 per ounce, while Brent crude oil fell to $89 a barrel. The yield on a ten-year Treasury increased by six basis points to around 4.9%.
Rather of initiating a huge ground invasion, the Israeli military has proceeded cautiously, and there are currently few indications that the battle will extend beyond the greater Middle East. as last week’s severe selloff, which caused the S&P 500 to enter a correction on Friday as the index closed 10% below a previous top, investors are viewing it as sufficient positive news to reenter the markets.
Investors should also keep an eye on a number of potentially volatile events this week, such as central bank meetings in the US, UK, and Japan and the US Treasury Department’s announcement of its quarterly bond sales schedule.
According to James Rossiter, global head of macro strategy at TD Securities, “the relatively contained operations over the weekend were perhaps a relief to markets, who are worried about other players being dragged into the conflict.” That is encouraging for certain high-risk assets. Having said that, there are a few risky occurrences this week for markets to consider.
The shekel gained 0.4% at 4.0543 after pausing its recent selling. This month, it continues to be the worst-performing currency globally, having just dropped to 11-year lows.
Shekel Gains as the Gaza War Enters a New Phase Following a 5-Week Selloff
The Treasury will set the stage on Monday for both its cash balance and its issuance intentions by providing an update on quarterly borrowing projections.
It appears that the Federal Reserve’s interest-rate decision on the same day will not be as significant to the market as the Treasury Department’s announcement of bond sales on Wednesday. The degree to which the Treasury will increase sales of longer-term debt to cover an increasing budget deficit will be made clear by the so-called quarterly refunding statement.
Even with the start of the Israel-Hamas conflict three weeks ago, bond rates are still high, creating a geopolitical flashpoint that may increase demand for Treasuries as a safe haven. Notwithstanding indications from policymakers that rate rises are “at or near” their conclusion, ten-year Treasury rates reached a 16-year high last week.
In terms of individual equities, HSBC Holdings Plc remained stable following the bank’s announcement of a pretax profit of $7.71 billion, which was below analyst projections, and its subsequent $3 billion share repurchase. Following the closure of the markets, Pinterest Inc. and Arista Networks Inc. are anticipated to release their quarterly results announcements.