Asian stocks surged on Thursday, trailing Wall Street gains as planned diplomatic talks between Russia and Ukraine boosted risk sentiment, although analysts warned the rally could be susceptible to a sharp reversal .
Oil prices also recovered, after falling more than 12% from the previous session, with the market wondering if major producers would increase supply to help fill Russia’s production gap due to sanctions for its invasion of Ukraine. MSCI’s broadest index of Asia-Pacific stocks outside Japan gained 1.6%, moving away from the lowest level since November 2020. Japan’s Nikkei rose 3.8%, the most in near 21 months.
Chinese blue chips rose 1.75% while Hong Kong’s Hang Seng index rose 0.6%. In Europe, equity futures point to a stronger open. The Euro Stoxx 50 rose 0.35%, although German DAX futures rose 0.55% and FTSE futures gained 0.48% in early trades.
Wall Street futures were slightly lower. S&P 500 futures fell 0.13% and Nasdaq futures fell 0.21%. Traders and investors are now awaiting a meeting of the European Central Bank later today for any sign of how Russia’s invasion of Ukraine will affect monetary policy in the region. US inflation figures are also due, which could further guide expectations for the Federal Reserve meeting next week.
Mansoor Mohi-uddin, chief economist at the Bank of Singapore, said financial markets rallied in hopes that Ukraine and Russia could begin to negotiate their differences more seriously. “The reaction, however, is unlikely to prove sustainable as the two countries still have major differences and the military conflict is expected to escalate, with Russia aiming to capture key cities from Ukraine.”
Russian Foreign Minister Sergei Lavrov arrived in Turkey on Thursday ahead of scheduled talks with his Ukrainian counterpart Dmytro Kuleba in what will be the first meeting between the two since Russia invaded Ukraine two weeks ago. Adding to the uncertainties, Russia on Wednesday accused the United States of declaring economic war on the country and warned Washington that it was considering its response to a ban on Russian oil and energy.
European Union leaders will gradually stop buying Russian oil, gas and coal, a draft statement said on Thursday, as the bloc seeks to reduce its dependence on Russian energy sources, following a ban from the United States. Brent crude futures rose 3% on Thursday to $114.64 a barrel, and U.S. crude rose 1.73% to $110.58 a barrel, after comments from the Minister of United Arab Emirates Energy, Suhail al-Mazrouei, that his country is committed to respecting the existing agreement between OPEC countries to increase oil supplies.
Earlier, prices fell after the UAE’s ambassador to Washington said the country would encourage OPEC to consider higher production to fill the supply gap due to sanctions imposed on Russia. Rising energy prices will bolster expectations that the US Federal Reserve will raise interest rates by 25 basis points at its policy meeting next week, with data due later today expected to show that the US consumer inflation will hit an annualized clip of 7.9% in February.
“US stocks could be in a holding pattern with higher levels of volatility as investors assess the impact of the Ukraine conflict on inflation and possible Fed actions,” said David Chao, strategist for global markets based in Hong Kong at Invesco. US stocks surged overnight, led by financials and technology stocks. The Nasdaq Composite gained 3.59% while the Dow Jones Industrial Average rose 2%.
Amazon.com Inc said Wednesday its board had approved a 20-for-1 split of the e-commerce giant’s common stock and authorized a $10 billion buyout plan, pushing the company’s stock up 7 % in extended exchanges. In currency markets, the euro was trading at $1.1054 after jumping 1.6% on Wednesday, its best day since June 2016, along with gains in European stocks and a bond selloff, while as the safe-haven yen slipped to a one-month low. of 116 per dollar.
The dollar index was at 98.144, after falling 1.2% overnight amid the surge in the euro, and hurt, along with the yen, by rising sentiment towards riskier assets like stocks. shares. Gold was slightly lower, with spot gold falling 0.6% to $1,977.89 an ounce.
The yield on the benchmark 10-year Treasury note fell slightly to 1.9409% from its US close of 1.948% on Wednesday. The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 1.6638% from a US close of 1.678%.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)