Wall Street steady as market focuses on price expectations, Ukraine

BOSTON/LONDON (Reuters) – Stocks settled on Wall Street on Friday after a technology-driven rally and higher US Treasury yields as markets assessed the possibility of US interest rates in store and the impact of the Russian war in Ukraine.

Dow Jones Industrial Average (.DJI)S&P 500 (.SPX) Both were only up about 0.2% in early trading on Friday, while the Nasdaq Composite was up (nineteenth) It was almost flat.

Global stocks also paused for breath on Friday, but are set for a second straight week of gains for the first time in 2022 although sentiment was broadly cautious. European stocks are poised for a slight weekly loss led by financial and energy stocks after two weeks of gains.

Stock prices received a boost from March Global Purchasing Managers’ Index (PMI) data this week which shows the global economy has been broadly resilient, but the longer-term economic outlook is making investors cautious. For example, Barclays lowered its forecast for global economic growth for 2022 this week to 3.3% while traders raised their short bets.

The global bond markets were still in the grip of one of the worst sell-offs in recent memory. US Treasuries are subject to their biggest annual loss since 1949 even as the pile of negative-yielding government debt has fallen to less than $2 trillion, from more than $18 trillion at the height of the pandemic, strategists at Bank of America said in a note.

Yields on the benchmark 10-year US Treasury, which led the bond market’s broader sell-off, rose to around 2.44% on Friday, the highest in nearly three years. Yields have risen by more than 75 basis points in the past two weeks as traders have been quick to revise their expectations for a rate hike.

not enough

The broader dollar index took a breather on Friday but was on track for a small weekly gain. The Euro was also marginally higher.

“EUR/USD remains stuck around 1.10, with better-than-expected Eurozone Purchasing Manager surveys for March not enough to spur buying interest,” UniCredit analysts said.

Markets expect US interest rates to rise by as much as 190 basis points in total for the remainder of this year, after a 25 basis point hike last week. Investors are setting an 88% probability of a 50 basis point rate hike in March.

Charles Evans, president of the Chicago Fed, was the latest US policymaker to sound hawkish, saying on Thursday that the Fed needs to raise interest rates “in time” this year and in 2023 to curb high inflation before it becomes part of the economy. Integral with American psychology and become equal. Difficult to get rid of. Read more

Market analysts at Morgan Stanley wrote in a note late Thursday that the Fed’s quick move was not overly worrisome for the economy.

“While an unregulated tightening of financial conditions continues to pose a risk to the outlook, particularly in areas such as credit, our underlying growth outlook remains constructive,” they wrote. “We believe it helps contain the risk that financial conditions will become extremely volatile in response to the Fed’s actions.”

Demand for safe haven assets including gold and the Swiss franc remained resilient as the conflict in Ukraine showed no signs of slowing. Ukrainian forces retake towns east of the capital, Kyiv, and Russian forces trying to capture the city are retreating on extended supply lines. Read more

Spot gold remained high at $1,946 an ounce, down about 0.8%. gold/

Oil continued to fall slightly on Friday, as the United States and its allies considered releasing more oil from storage to calm markets. Brent crude fell about 1.3 percent to $117.43 a barrel and US crude fell 1.4 percent to just over $110 a barrel, but prices are still high by historical standards.

Additional reporting by Lawrence Delevingne in Boston and Sickat Chatterjee in London. Editing by Susan Fenton

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