Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Bond Auctions, Peloton Shake-Up, Ukraine Diplomacy - What's Moving Markets

Published 08/02/2022, 11:12 pm
Updated 08/02/2022, 11:12 pm
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- Bond markets remain under pressure ahead of a test of strength in the shape of three big Treasury auctions this week. The first of those takes place later Tuesday. Peloton (NASDAQ:PTON)'s CEO John Foley steps down and says the company is open to anything that will repair the 80% drop in its stock price. Pfizer (NYSE:PFE) reports earnings with the end of the pandemic seemingly coming over the horizon, while jaw-jaw in Moscow and Washington seems to have made some progress in stopping war-war in Ukraine. Oil prices retreated from overbought level as tension was ratcheted down a notch. Here's what you need to know in financial markets on Tuesday, 8th February.

1. Bonds yields push higher ahead of Treasury auctions

U.S. bond yields pushed higher ahead of a series of auctions that will show whether the market thinks it has now priced in all the monetary tightening that it needs to.

A three-year note auction by the Treasury later will be followed by sales of 10-year notes on Wednesday and 30-year bonds on Thursday, with all three maturities currently trading at or near their highest in over two years.

In Europe, however, the market has consolidated after ECB President Christine Lagarde told the European Parliament that any tightening of its policy would be ‘gradual’ and ‘data-dependent’.

The data calendar holds few terrors for either market Thursday, with U.S. trade figures for January due at 8:30 AM ET and surveys from the NFIB and Redbook Research also out. In Europe, the Polish Central Bank is expected to raise its key rate again, by 50 basis points to 2.75%.

2. Peloton switches CEO, announces big job cuts 

Peloton stock fell in premarket after the company said its CEO John Foley will step down and be replaced by former Netflix (NASDAQ:NFLX) and Spotify (NYSE:SPOT) executive Barry McCarthy.

The maker of connected fitness machines has seen its stock drop by more than 80% from its peak as pandemic-driven behaviors have started to revert back to normal.

The company also said it will cut 2,800 jobs – around 20% of total corporate headcount – and announced the appointment of other new directors. It gave no detail on rumors about possible bid interest from the likes of Amazon (NASDAQ:AMZN) or Nike (NYSE:NKE), but Foley - who together with other company insiders still controls around 80% of Peloton’s voting stock – told The Wall Street Journal that “we are open to exploring any opportunity that could create value for Peloton shareholders.” Peloton reports its quarterly earnings after the closing bell later.

3. Stocks set to open mixed; Pfizer earnings due; Chip deal finally scrapped 

U.S. stock markets are set to open flat later, with little appetite for big new moves ahead of the Treasury auctions and, even more importantly, the January consumer inflation data due on Thursday.

By 6:15 AM ET, Dow Jones futures were up 11 points, less than 0.1%, while S&P 500 futures and NASDAQ 100 futures were down by less than 0.15.

Stocks likely to be in focus later include Meta Platforms (NASDAQ:FB), which slid another 5% on Monday as long-time backer Peter Thiel prepared to resign from its board, reportedly in order to focus on helping Republican candidates at the mid-term elections in November.

Also in focus will be Nvidia (NASDAQ:NVDA), which finally took the long-awaited step of cancelling its planned purchase of chip designer ARM from Softbank (OTC:SFTBY), paying the Japanese company $1.25 billion for its pains.

Pfizer leads the day’s earnings roster, along with Chipotle Mexican Grill (NYSE:CMG)  and DuPont (NYSE:DD). Videogames publisher Take Two Interactive, meanwhile, is indicated lower after giving a disappointing outlook late on Monday. 

4. Signs of detente in Russia-Ukraine crisis help European energy prices

European gas prices continued to ease gradually and the Russian rouble rose to its highest in four weeks amid further signs that diplomacy will prevent a Russian invasion of Ukraine.

Russian President Vladimir Putin hinted that lengthy talks with his French counterpart Emmanuel Macron had made tentative progress, saying that some of Macron’s proposals "could form the basis of further joint steps." French officials quoted by the BBC said that Russia had made a commitment not to take any new military initiatives, in order to allow a de-escalation. However, the Kremlin disputed that interpretation.

U.S. President Joe Biden said on Monday that the U.S. will close down the Nord Stream 2 gas pipeline if Russia invades. German Chancellor Olaf Scholz, standing next to Biden, couldn’t bring himself to mention the controversial project but said Germany would side with the U.S. in such a case.

Other stresses on Europe’s energy supplies remain, however: French power giant Electricite de France, which has already revised down its output forecast for this year, was forced to halt output at three further nuclear reactors due to unscheduled maintenance, AFP reported.

5. Oil corrects after bull run; API, STEO eyed

Crude oil prices slipped below $90 a barrel as signs of a de-escalation in the Russia-Ukraine situation increased. By 6:30 AM ET, U.S. crude futures were down 1.8% at $89.67 a barrel, while Brent crude futures kept their $90 handle at $90.81, despite a 2% drop.

The American Petroleum Institute will report its weekly inventory data at 4:30 PM ET as usual, while the U.S. will also publish its regular Short-Term Energy Outlook.

Meanwhile in Vienna, talks on lifting the U.S. sanctions on Iran in return for better behavior on its nuclear program have made little progress.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.