Stock Futures Rise, Dollar Swings; US Yields Climb: Markets Wrap

(Bloomberg) — U.S. and European equity futures rose while the dollar fluctuated and Treasuries fell as investors weighed a frenetic weekend of efforts to safeguard the global banking system.

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Early readings on UBS Group AG’s agreement to buy Credit Suisse Group AG and central bank moves to boost dollar liquidity suggested sentiment maybe turning for the better. Two weeks featuring multiple US bank failures followed by more problems at Credit Suisse had added to the rising conviction that global economies will struggle.

Euro Stoxx 50 futures added about 0.5% and contracts for the S&P 500 rose 0.4% after the US index dropped in excess of 1% on Friday, dragged down by the financial sector. The gains began to contract as the Asian trading morning continued.

Contracts for the Nasdaq 100 gained around 0.2% after the gauge notched its best week since November with a jump of 5.8%, despite a slump Friday. Technology stocks, which often benefit from lower interest rates, have been supported by concern that the turmoil in the banking sector will tip the global economy into recession, in turn forcing central banks to reverse course on monetary tightening.

A dollar gauge swung between small gains and losses. The Swiss franc fluctuated, the yen declined and the risk-sensitive Australian dollar gave up an advance in choppy trading.

Commodity markets signaled a modest, initial return to risk taking. Crude oil edged higher after collapsing by more than 10% last week, while copper futures also gained. Gold fell from a one-year high. Still, equities benchmarks for Australia, Japan and Hong Kong fell.

The policy-sensitive two-year Treasury yield, which slumped over 30 basis points on Friday, regained half of the decline at one point Monday to regain the 4% level, before easing back again. Traders are trying to assess the Federal Reserve’s next move amid the recent financial instability and a softer-than-expected reading on inflation expectations.

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Much of the debate in markets is now focused on whether the Fed will deliver another quarter-point…


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