US futures dip; oil rises amid Russia tension: markets wrap

US and European equity futures slipped Tuesday and crude oil climbed as investors evaluated the prospect of tougher sanctions against Russia for alleged atrocities during the war in Ukraine.

The European Union said work is under way on additional sanctions, while the US said it may impose further penalties this week. Russia rejected allegations of war crimes, but its increasing isolation may sow more concerns about disruptions to commodity supplies. Crude oil extended an advance.

Asian shares made modest gains in a session constrained by market holidays in Hong Kong and China. Australia’s dollar and bond yields surged on a hawkish tilt by the nation’s central bank, which left borrowing costs unchanged but jettisoned a reference to being patient over policy.

Treasuries retreated, with the spotlight remaining on inverted yield curves. The latter point to an economic downturn should the Federal Reserve deliver a series of aggressive interest-rate hikes to quell high inflation.

The yen strengthened following comments from Bank of Japan Governor Haruhiko Kuroda, who said its current moves are somewhat rapid. The yen is this year’s weakest performer in the Group-of-10 currency basket.

Market moves are continuing to be shaped by the ramifications of the conflict and tightening monetary policy as raw-material costs stoke inflation. The Fed minutes later this week will guide expectations for how rapidly the US central bank will increase rates and reduce its bond holdings.

“Between now and June we’re going to get a lot of information the market has to price in,” Subadra Rajappa, head of US rates strategy at Societe Generale SA, said on Bloomberg Television. “In that sort of context, the bias is potentially towards higher yields and flatter curves.”

In the latest step to punish Russia, dollar debt payments from Russian government accounts at US financial institutions have been halted, according to a person with knowledge of the matter.

Russia will instead have to choose between draining dollar reserves held within its borders, spending new revenue it collects, or going into default, the official said, asking not to be identified.

Meanwhile, JPMorgan Chase & Co. is reviewing its business with some commodity clients after last month’s nickel short squeeze, a move that threatens to drain more liquidity out of the sector.

Key events to watch this week:

• Fed Governor Lael Brainard speaks Tuesday
• Federal Reserve minutes Wednesday
• China Caixin composite and services PMI Wednesday
• EIA crude oil inventory report Wednesday
• Philadelphia Fed President Patrick Harker speaks Wednesday
• St. Louis Fed’s James Bullard, Atlanta Fed’s Raphael Bostic, Chicago Fed’s Charles Evans speak at separate events Thursday
• Reserve Bank of India rate decision Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 7:42 a.m. in London. The S&P 500 rose 0.8%
• Nasdaq 100 futures shed 0.2%. The Nasdaq 100 rose 2%
• Japan’s Topix index decreased 0.2%
• South Korea’s Kospi index added 0.1%
• Australia’s S&P/ASX 200 index climbed 0.2%
• Euro Stoxx 50 futures slid 0.3%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was at $1.0972
• The Japanese yen was at 122.54 per dollar, up 0.2%
• The offshore yuan was at 6.3660 per dollar, up 0.1%

Bonds

• The yield on 10-year Treasuries rose three basis points to 2.43%
• Australia’s 10-year bond yield rose two basis points to 2.86%

Commodities

• West Texas Intermediate crude rose 1.7% to $105.08 a barrel
• Gold was at $1 931.90 an ounce