Stocks pause NewYear sell-off; oil extends rally

After a rough start to the year, markets took a breather on Thursday, with U.S. equity futures posting small gains and Treasury yields edging closer to 4%.

S&P 500 futures added 0.1% after the index capped a three-day sell-off yesterday. Apple Inc. dipped as Piper Sandler flagged concern about iPhone inventory levels.

Tesla Inc. climbed as Cathie Wood started buying the company’s shares after selling them for most of last year.

Oil extended a rally on supply disruptions in Libya and conflict in the Middle East. European stocks rose, helped by gains in energy shares.

The consensus from investors is that markets have been overdue a pullback after stocks soared at the end of last year.

The Nasdaq 100 Index slid almost 3% in two days of the month and swaps traders have been reining in their bets on rate cuts.

“There was some sort of a ‘dry January’ syndrome across markets these two last sessions,” said Vincent Juvyns, global market strategist at JPMorgan Asset Management.

European inflation data and the monthly U.S. jobs report tomorrow will provide more information about whether central banks have room to start lowering interest rates.

Minutes on Wednesday from the Fed’s December meeting suggested rates could remain at restrictive levels “for some time.”

“This confirms that things won’t move as quickly as some would like,” said Lindsay James, investment strategist at Quilter Investors. “It needs to be accepted that the Fed is still very data driven around inflation and the economic data.”

Oil rally

Brent crude traded near $79 a barrel after supply disruptions in Libya, and as Iran said attacks that killed almost 100 people in the country were carried out to punish its stance against Israel.

Europe’s Stoxx 600 index was buoyed by oil majors including TotalEnergies SE and BP Plc after crude jumped more than 4% in two sessions.

Among equity movers, Next Plc rallied as the British home and clothing retailer raised its profit forecast for the fifth time since June following a successful Christmas shopping season.

JD Sports Fashion Plc tumbled 20% in early trading after the British sportswear retailer slashed its profit forecast, blaming unseasonable weather and cautious consumer spending for weak sales in the run-up to Christmas.

In currency markets, the yen weakened on speculation that it’ll be harder for the Bank of Japan to abolish negative interest rates after a powerful earthquake hit the country on New Year’s Day.

Morgan Stanley MUFG Securities Co. changed its call for the BOJ rate decision this month and now sees it leaving current policy in place.