US stocks mixed as oil rises and traders await central bank meetings

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US stocks were mixed on Monday as investors weighed up the latest advance to multi-month highs for crude oil prices and looked ahead to a busy week of central bank meetings.

The S&P 500 was up 0.1 per cent in afternoon trading in New York, having swung into positive territory from being lower for much of the morning session. The tech-focused Nasdaq Composite was down less than 0.1 per cent.

Gains for energy stocks, as the price of crude rose, as well as a more than 2 per cent advance for index heavyweight Apple helped offset declines from the S&P 500’s materials and consumer discretionary sectors.

ConocoPhillips, ExxonMobil and Chevron were up 0.8 per cent, 0.7 per cent and 0.4 per cent, respectively, as the price of Brent crude surged to almost $95 a barrel. The global oil benchmark settled 0.5 per cent higher to a 10-month higher of $94.43, while US market West Texas Intermediate, rose 0.8 per cent to $91.48.

Oil prices have risen since Saudi Arabia and Russia, two of the world’s largest producers, announced plans earlier this month to extend their voluntary production and export cuts.

The rising cost of oil, and its potential impact on inflation, came as traders prepared for interest rate decisions from three of the world’s largest central banks this week. The US Federal Reserve is expected to keep its target range unchanged on Wednesday at between 5.25 per cent and 5.5 per cent. 

Investors will closely assess the Fed’s summary of economic projections, which will give insight to how central bank officials view the interest rate outlook.

Economists at the Bank of America anticipate a “hawkish” version of the Fed’s so-called dot plot of interest rate projections, with one more rate rise in 2023 to a terminal rate between 5.5 per cent and 5.75 per cent, and 0.75 percentage points of cuts in 2024.

The yield on the policy-sensitive two-year US Treasury was 0.03 percentage points higher to 5.06 per cent, while the yield on the 10-year Treasury was down 0.01 percentage point at 4.32 per cent. Yields rise as bond prices fall.

The Bank of England, which is due to hold a rate-setting meeting on Thursday, is forecast to increase its benchmark bank rate by a quarter of a percentage point to 5.5 per cent. On Friday, the Bank of Japan is expected to keep rates unchanged at minus 0.1 per cent.

Line chart of Share price, rebased (%) showing SocGen shares slump on lower profit targets

European and Asian markets posted declines, with the region-wide Stoxx Europe 600 ending the day 1.1 per cent lower and Hong Kong’s Hang Seng index falling 1.4 per cent.

The Euro Stoxx 600 bank index slid 1.8 per cent as investors took a dim view of the strategic plan announced by Société Générale’s new chief executive Slawomir Krupa, which included cuts to profitability targets. Shares in the French bank sank 12.1 per cent, leading fallers on France’s CAC 40 index, which finished down 1.4 per cent.

Investors remained wary of a downturn in the chip sector after Taiwan’s TSMC — the world’s biggest contract chipmaker — told its main suppliers last week to delay delivery of high-end chipmaking equipment.

TSMC, which lost 3.2 per cent on Monday, has been warning that the recent boom in artificial intelligence technology has not offset broader economic headwinds and China’s stalled recovery.

UK chip designer Arm was down 6 per cent during afternoon trading on Wall Street, after last week completing the largest initial public offering on a US exchange in almost two years.

In Europe, the Oslo-listed Nordic Semiconductor shed 9.9 per cent after cutting its revenue guidance for the third quarter. Shares of Dutch chipmaker ASML fell 0.8 per cent and BE Semiconductor lost 4 per cent. South Korea’s SK Hynix declined 2.8 per cent.

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