ukraine x russia
Stocks fell and energy prices rose as optimism about a de-escalation of Russia’s war in Ukraine faded.
U.S. futures slipped amid warnings that gains of the past two weeks have the hallmarks of a bear-market rally and concerns that the Treasury curve signals a looming recession. Europe’s Stoxx 600 snapped a three-day winning streak after surging to the highest level in five weeks, as the Kremlin said that talks with Ukraine in Istanbul Tuesday yielded no breakthroughs.
The dollar slipped, the euro climbed and the yen bounced from a six-year low after the Bank of Japan pledged to buy more securities than planned and include longer-dated debt.
European bonds slid, led by shorter maturities, as traders bet higher inflation will force the European Central Bank to end its era of negative rates sooner than previously anticipated. German two-year yields, among the most sensitive to changes in the key policy rate, are on course for their first close above zero since 2014.
Confidence in the euro-area economy fell to the weakest level in a year, with inflation expectations jumping to the highest since records began in 1985. Spanish inflation surged at the fastest rate in almost four decades.
Energy and commodity stocks advanced with oil and natural gas as NATO allies evaluate whether Russia’s promise to scale back military operations marks a turning point in the conflict or simply a tactical shift as attacks were still reported near Kyiv. Talks with Ukraine yielded no breakthroughs and a lot of work remains before a deal is possible, Kremlin spokesman Dmitry Peskov said, underlining the difficulties facing efforts to reach a cease-fire.
Germany triggered an emergency plan to brace for a potential Russian gas cut-off, as President Vladimir Putin steps up demands that the fuel should be paid for in rubles. Russia may expand the list of commodities for which it demands payment in rubles to include grain, oil, metals and others.
The rally in equities globally remains fragile as the war in Ukraine drags on. The Treasury yield curve’s inversion is fanning debate over the risks of a growth downturn as central banks globally begin to withdraw stimulus. Money markets in the U.S. are pricing in two percentage points of additional interest-rate hikes this year.
“The yield curve inversion needs to be sustained before it’s a predictor of anything,” Mariann Montagne, senior portfolio manager at Gradient Investments , said on Bloomberg Television. “We’ll have volatility both in the stock and the bond markets but we think that progression” on the cease-fire talks will lead to upward earnings revisions.
A lack of clarity on the cease-fire talks and supply-chain shortages will pose headwinds for the markets, she said.
Consumer sentiment appears resilient, as the latest U.S. confidence data suggest solid job growth has offset Americans’ concerns over accelerating inflation for now. Government data Friday are expected to show the economy probably added close to a half million jobs in March as the unemployment rate fell to 3.7%.
Apple shares were slightly lower in premarket trading, set to end their longest winning streak since 2003 after the iPhone maker surged nearly 20% over the past 11 days. Chinese live-streaming platforms fell in premarket after Chinese government agencies vowed to crack down on any tax-related crimes in the sector.
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