(Bloomberg) — U.S. stocks edged lower and commodities rallied as a global supply crunch and the threat of persistently high inflation kept investors on the edge.
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The S&P 500 Index was little changed after the underlying gauge posted the biggest weekly loss since February. Copper and aluminum rose, while oil surged before an OPEC+ meeting on production targets. Moderna Inc. fell as traders dumped vaccine stocks following Merck & Co.’s announcement about an effective Covid-19 drug.
Global markets have taken a risk-off turn as the post-pandemic recovery stalls on supply shortages in everything from semiconductors to coffee. A spreading energy crunch has added to concern elevated inflation will be longer-lasting than policy makers predict. Risks are multiplying at a time investors are bracing for Federal Reserve tapering as early as next month.
“U.S. equities have come under selling pressure after facing higher rates and signs of a slowdown in economic momentum,” Craig W. Johnson, chief market technician at Piper Sandler & Co., wrote in a note. “We believe rates will grind higher into year-end and perhaps most importantly, we do not expect the recently disruptive rate of change to continue. While the SPX has suffered technical damage from the September shakeout, the long-term secular uptrend remains intact.”
Europe’s energy crisis continued to worsen with power and gas prices surging before the onset of winter. The power contract for November in Germany traded above 200 euros per megawatt-hour, a record. Natural-gas futures also extended a rally.
Meanwhile, oil rose amid a debate whether OPEC+ members will consider boosting output more than planned. West Texas Intermediate traded around $77 per barrel before a scheduled meeting of the alliance.
Treasury yields rose with the 10-year rate adding three basis points. The dollar slid for a third day.
Moderna shares dropped 7% in New York trading, while the depositary receipts of BioNTech SE slid 6%. The losses came after Merck said Friday its experimental pill cuts the risk of hospitalization and death from Covid-19 in half. Some traders saw the news as a turning point in the global fight against the virus. Merck rose 2.7%.
Tesla climbed after the electric-car maker reported record third-quarter deliveries that beat estimates.
In Europe, Wm Morrison Supermarkets Plc declined 3.8% after CD&R emerged as the highest bidder for the British grocer, though analysts said the offer terms resulting from the auction process were disappointing.
Japanese and Hong Kong equities dropped after trading in the shares of the debt-ridden China Evergrande Group was suspended in Hong Kong, along with those of its property management arm, amid reports of a unit stake sale. Mainland Chinese markets are closed through Thursday for the Golden Week holidays.
For more market analysis, read our MLIV blog.
Here are some events to watch this week:
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OPEC+ meets virtually Monday to review output policy amid a global energy crunch.
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Reserve Bank of Australia policy decision Tuesday
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Rate decision in New Zealand on Wednesday
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Reserve Bank of India monetary policy decision on Friday
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The U.S. Labor Department releases unemployment and job creation data Friday
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Annual Nobel announcements start on Monday, with the Peace Prize being awarded on Friday
Some of the main moves in markets:
Stocks
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The S&P 500 was little changed as of 9:32 a.m. New York time
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The Nasdaq 100 fell 0.5%
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The Dow Jones Industrial Average was little changed
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The Stoxx Europe 600 rose 0.3%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.3% to $1.1632
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The British pound rose 0.5% to $1.3613
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The Japanese yen was little changed at 111.14 per dollar
Bonds
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The yield on 10-year Treasuries advanced three basis points to 1.49%
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Germany’s 10-year yield advanced one basis point to -0.21%
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Britain’s 10-year yield was little changed at 1.01%
Commodities
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West Texas Intermediate crude rose 1.7% to $77.17 a barrel
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Gold futures fell 0.4% to $1,750.90 an ounce
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