6 months ago
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By Rae Wee
SINGAPORE (Reuters) - Global stocks began Tuesday on a cautious note while oil prices stayed elevated as the escalating conflict in the Middle East sapped risk appetite ahead of China's highly anticipated reopening after a long holiday.
The benchmark 10-year U.S. Treasury yield held above 4% in early Asia trade, as a robust U.S. labour market prompted traders to heavily scale back their expectations for Federal Reserve rate cuts. [US/]
Hezbollah on Monday fired rockets at Israel's third-largest city, Haifa, and Israel looked poised to expand its offensive into Lebanon, one year after the devastating Hamas attack on Israel that sparked the Gaza war.
Heightened fears of a widespread conflict and disruptions to supply sent Brent crude futures surging above $80 a barrel for the first time in over a month in the previous session.
It was last 0.09% higher at $81.00 per barrel, while U.S. crude futures rose 0.14% to $77.25 a barrel.
"The global benchmark hit USD80/bbl as expectations grow that Israel will target Iran's oil infrastructure in retaliation for a missile attack last week. President Biden's comments didn't allay these fears," said analysts at ANZ in a note.
"We still think a direct attack on Iran's oil facilities is the least likely of Israel's retaliation options."
Still, the dour mood kept stocks on tenterhooks on Tuesday.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.05%, while Tokyo's Nikkei opened 0.79% lower.
S&P 500 futures tacked on 0.03% while Nasdaq futures lost 0.01%.
But the cautious moves in stocks could change once Chinese markets reopen after a week-long holiday later in the day. Gains and volatility could be on the cards, given Singapore-traded FTSE China A50 futures have rallied some 14% since China's cash markets closed on Sept. 30.
Hong Kong's Hang Seng China Enterprises index was up 11% over the same period, pointing to a catch-up rally for the mainland.
Before the break, China announced its most aggressive stimulus measures since the pandemic, in a move which sent the CSI300 soaring 25% over five sessions and sparked a rally across global share markets.
Focus will also be on a press conference from the country's National Development and Reform Commission due at 0200 GMT, for further details around the stimulus pledges that drove the market frenzy.
"Whether the outcome meets any expectations will determine if the Hong Kong market can go up further," said Richard Tang, China strategist and Hong Kong head of research at Julius Baer.
