Markets weak as US and allies try to calm Middle East tensions

investmentnews.com:

European stocks and US equity futures fluctuated while Treasuries dropped as traders tracked efforts by the US and its allies to prevent further escalation of the Israel-Hamas conflict.

Technology stocks led declines in Europe’s Stoxx 600 index after Bloomberg reported that the US is considering further restrictions to curb China’s access to advanced semiconductors. Polish stocks jumped the most since May 2022 and the zloty rallied as a bloc of pro-European opposition parties appeared on track to unseat the nationalist government.

“The zloty should continue to strengthen further in the near-term in anticipation of improving relations with the European Union that will help to support growth and attract capital inflows,” said Lee Hardman, senior currency analyst at MUFG Bank.

Markets steadied slightly after last week’s rush into haven assets, as traders await further developments in the Middle East. S&P 500 contracts and those for the Nasdaq 100 were steady. Treasury 10-year yields rose more than six basis points after dropping 19 basis points last week. Gold declined more than 1%.

Oil prices traded in a narrow range as US officials rushed to speak with Middle Eastern nations — including back-channel talks with Iran — to contain the conflict. A sharper escalation could bring Israel into a direct clash with Iran, a supplier of arms and money to Hamas, which the US and the EU have designated a terrorist group. 

A gauge of Asian shares slipped as stocks dropped in mainland China despite the central bank making the biggest medium-term liquidity injection since 2020.

Headwinds in China’s markets are growing. The US has moved to tighten curbs on advanced chip technology and concerns continue about the mainland property sector.