Stocks Set to Slip as Traders Assess Ukraine Risks: Markets Wrap

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(Bloomberg) — Stocks are set to fall Monday on geopolitical risks and growing calls from Federal Reserve officials for higher interest rates to fight inflation.

Futures for Japan, Australia and Hong Kong were lower after Wall Street shares slid Friday amid risk aversion. US markets are shut for a holiday Monday.

The threat of Russian military action against Ukraine has boosted havens like sovereign bonds, though demand for shorter-maturity Treasuries will be tested Tuesday by a flood of supply. Australian bond yields fell, while the dollar was mixed in early trading.

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Questions are swirling about what might happen to supplies of energy, grain and some metals if the Ukraine situation deteriorates. Oil is being buffeted by those concerns as well as the potential for a return of Iranian barrels.

In cryptocurrencies, Bitcoin retreated over the weekend and was trading near $38,000, adding to evidence of investor caution.

The US has told allies that a Russian invasion of Ukraine would potentially see it target multiple cities beyond the capital Kyiv. President Joe Biden said on Friday he’s convinced Russian counterpart Vladimir Putin has decided to move against Ukraine. Moscow continues to deny it plans to invade .

The standoff between the West and Russia over Ukraine, along with the worry that tightening Fed monetary policy could choke growth in the world’s biggest economy, point to more swings in markets in an already volatile year.

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Clients “are clearly concerned about tensions in Ukraine, which seem to be escalating, in addition to the concerns that we’ve been talking about for months like inflation and interest rates and slowing economic growth,” JoAnne Feeney, partner at Advisors Capital Management, said on Bloomberg Television.

Two top Federal Reserve officials at the end of last week backed raising rates in March to curb the hottest inflation in 40 years. They also supported starting balance-sheet reduction in coming months. JPMorgan Chase & Co. said the Fed is likely to raise rates by 25 basis points at nine consecutive meetings.

The Fed’s key inflation metric may have accelerated to a fresh four-decade high in January, data this week is expected to show.

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China’s stocks will be closely watched amid fresh attempts by the government to crack down on the private sector and more default warnings from developers. A gauge of Chinese stocks traded in the US tumbled Friday.

Bloomberg Economics expects China’s banks to keep loan prime rates steady after a cut in January.

Here are some events to watch this week:

Russia’s Foreign Minister Sergei Lavrov has agreed to meet US Secretary of State Antony Blinken this week in EuropeFed Governor Michelle Bowman speaks MondayChina property prices, loan prime rates MondayNew Zealand rate decision WednesdayBOE Governor Andrew Bailey appears before the Treasury Committee WednesdayBank of Korea policy decision ThursdayEIA crude oil inventory report ThursdayFed officials Loretta Mester and Raphael Bostic speak ThursdayU.S. new home sales, GDP, initial jobless claims ThursdayU.S. consumer income, US durable goods, PCE deflator, University of Michigan consumer sentiment Friday

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Some of the main moves in markets:

Stocks

The S&P 500 fell 0.7% Friday The Nasdaq 100 fell 1.1% Friday Nikkei 225 futures fell 0.9% earlierAustralia’s S&P/ASX 200 Index futures fell 0.7%Hang Seng Index futures lost 0.8% earlier

Currencies

The Japanese yen was at 114.94 per dollarThe offshore yuan traded at 6.3248 per dollarThe Bloomberg Dollar Spot Index rose 0.2% FridayThe euro was at $1.1317

Bonds

The yield on 10-year Treasuries declined three basis points to 1.93%Australia’s 10-year yield fell six basis points to 2.19%

Commodities

West Texas Intermediate crude was at $91.07 a barrelGold was at $1,898.43 an ounce

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