Stocks and Bonds Drift Before Biden’s Israel Visit: Markets Wrap

(Bloomberg) — Stocks struggled for direction and bonds trimmed a decline as investors kept a close eye on diplomatic efforts to contain the Israel-Hamas war, including a visit to the region by US President Joe Biden planned for Wednesday.

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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 on Monday. Brent crude oil traded near $90 a barrel.

Biden is set to travel to Israel 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 by Israel 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.”

Read more: Is Market Calm on the Mideast Right, or Dangerous?: John Authers

Elsewhere, the pound weakened after UK wage growth slipped, suggesting a cooling of labor-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.

An update is also due Tuesday from United Airlines Holdings Inc. before Netflix Inc. and Tesla Inc. kick off tech-related earnings on Wednesday.

Aside from geopolitics and earnings, traders are tracking comments from a slew of Federal Reserve speakers this week before a blackout period kicks in ahead of the central bank’s November rate-setting meeting. Philadelphia Fed President Patrick Harker on Monday repeated comments he made last week asserting the central bank can hold its benchmark rate steady as long as there is not a sharp turn in the economic data.

In Asia, a gauge of the region’s stocks snapped a two-day decline. Country Garden Holdings Co. is on the radar as the clock is ticking for the distressed developer to pay interest on a dollar bond. The builder, which has become a symbol of China’s broader property debt crisis, must pay a $15.4 million coupon by the end of a 30-day grace period Oct. 17-18 before a default can be called.

Key events this week:

Chinese President Xi Jinping hosts world leaders at the Belt and Road Initiative forum from Tuesday to Wednesday, with Russian President Vladimir Putin expected to attend
Joint European Central Bank/IMF policy and research conference, Tuesday
Germany ZEW survey expectations, Tuesday
UK jobless claims, unemployment, Tuesday
US retail sales, business inventories, industrial production, Tuesday
Goldman Sachs, Bank of America earnings, Tuesday
New York Fed President John Williams moderates discussion, while Richmond Fed President Tom Barkin speaks at a separate event, Tuesday
Reserve Bank of Australia Governor Michele Bullock speaks, Wednesday
China GDP, retail sales, industrial production, Wednesday
UK CPI, Wednesday
Eurozone CPI, Wednesday
Morgan Stanley, Netflix, Tesla earnings, Wednesday
Federal Reserve issues Beige Book economic survey, Wednesday
Philadelphia Fed President Patrick Harker and New York Fed President John Williams speak at separate events, Wednesday
Australia unemployment, Thursday
Japan trade, Thursday
China property prices, Thursday
US initial jobless claims, existing home sales, leading index, Thursday
Federal Reserve Chair Jerome Powell, Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, Dallas Fed President Lorie Logan speak at different events, Thursday
Japan CPI, Friday
China loan prime rates, Friday
Philadelphia Fed President Patrick Harker speaks, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 fell 0.1% as of 9:56 a.m. London time
S&P 500 futures fell 0.3%
Nasdaq 100 futures fell 0.3%
Futures on the Dow Jones Industrial Average fell 0.3%
The MSCI Asia Pacific Index rose 0.6%
The MSCI Emerging Markets Index rose 0.5%

Currencies

The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.2% to $1.0535
The Japanese yen fell 0.1% to 149.68 per dollar
The offshore yuan fell 0.2% to 7.3214 per dollar
The British pound fell 0.5% to $1.2153

Cryptocurrencies

Bitcoin rose 0.2% to $28,463.6
Ether was little changed at $1,588.21

Bonds

The yield on 10-year Treasuries advanced four basis points to 4.74%
Germany’s 10-year yield advanced two basis points to 2.80%
Britain’s 10-year yield was little changed at 4.47%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Toby Alder, Tassia Sipahutar, Robert Brand and Sujata Rao.