Take Five: Another curve ball for markets
(Reuters) -Escalating tension in the Middle East and surging U.S. bond yields set financial markets up for more turbulence, exacerbated by high oil prices and China's property pain.
The European Central Bank looks set to sit tight after a string of interest rate hikes, while there is a slew of U.S. earnings and Argentina's presidential election.
Here's your week ahead in markets from Amanda Cooper and Naomi Rovnick in London, Kevin Buckland in Tokyo, and Lewis Krauskopf and Rodrigo Campos in New York.
1/ UNEASY CALM
War is raging between Israel and Palestinian militant group Hamas and an uneasy calm grips markets as they wait and see how the conflict unfolds.
Market reaction has been relatively modest with Wall Street's so-called fear gauge, the VIX index, showing investors are not as nervous as they were when Russia invaded Ukraine last year — at least, not yet.
Oil is the barometer to watch. It hit $93 a barrel on Wednesday as the risk of escalation threatened to disrupt Middle East oil supplies.
A wider conflict would deliver another shock to markets, potentially forcing the hand of central banks that have been unswerving in their determination to fight inflation.
The «flash» manufacturing and service sector activity surveys in coming days could add to uncertainty if they point to economic weakness.
2/ STOPPING HERE?
The European Central Bank, meeting on Thursday, will likely have one eye on the potential for conflict in the Middle East to disrupt dis-inflationary trends and the other on a weakening economy.
Hopes for rate cuts would be premature. ECB chief economist Philip Lane says the central bank was still «quite some distance» from easing monetary policy.
But traders can expect, at least, a pause for now.
A
Read more on investing.com
