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BLOOMBERG
Stocks struggled for direction and bonds trimmed a decline as investors kept a close eye on diplomatic efforts to contain the Israel war, including a visit to the region by US President Joe Biden planned for on Wednesday.
Europe’s Stoxx 600 Index and futures contracts for US equities kept to narrow ranges as traders prepared for a flurry of major earnings, including Goldman Sachs Group Inc, Bank of America Corp and Johnson & Johnson.
Shares in Ericsson AB slumped more than 9% after the Swedish 5G-equipment maker warned of persisting weak demand. Rolls Royce Holdings Plc rose after the jet engine maker announced plans to cut jobs and streamline its business. Poland’s stocks and currency extended gains following Sunday’s elections, which gave pro-European Union parties a majority in parliament.
Yields on the US 10-year benchmark rose beyond 4.7%, but were off their highs for the day. The dollar strengthened, while Israel’s shekel extended its decline after sliding past 4 against the greenback.
Brent crude oil traded near $90 a barrel.
Biden is set to travel to Israel on Wednesday as part of a push to prevent the conflict from spreading. Secretary of State Antony Blinken also returned to Israel to meet Prime Minister Benjamin Netanyahu, after talks with Arab governments. Russian President Vladimir Putin held a call with the leaders of Egypt, Syria, Iran and the Palestinian Authority.
“Markets fear a ground offensive that could ignite a larger and more complicated regional conflict that risks regional supply chains, energy output, economic growth and financial stability,” said Kyle Rodda, senior market analyst at Capital.com. “The presence of President Biden in the region potentially lowers the odds of such an offensive in the coming days, providing markets with some breathing room, if only for a small window.”
Elsewhere, the pound weakened after UK wage growth slipped, suggesting a cooling of labour-market pressures that will make it easier for the Bank of England to keep interest rates on hold next month.
Investors will be closely watching the next batch of corporate results, after Wall Street strategists warned that the outlook for earnings is weakening. Goldman Sachs and Bank of America take center stage after JPMorgan Chase & Co, the largest US bank, posted its latest quarter of record net interest income and boosted its forecast for the year at the end of last week, while Citigroup Inc’s results topped analyst estimates.