Stocks Jump on Optimism for Ukraine-Russia Talks: Markets Wrap

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(Bloomberg) — Stocks rose and oil fell Tuesday on optimism for progress in cease-fire talks between Russia and Ukraine. 

U.S. equity futures jumped after Russia said it was taking steps to “de-escalate” the conflict, pledging to cut back military operations and holding out the prospect of a meeting between Vladimir Putin and his Ukrainian counterpart Volodymyr Zelenskiy to seal a possible peace deal. 

European stocks climbed to the highest level in more than a month, while energy and commodity stocks underperformed. West Texas Intermediate erased earlier gains to trade down as much as 7.1%, below $100 in New York. The dollar and gold also fell.

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Government bond yields advanced, with bets on aggressive U.S. monetary tightening hurting shorter maturity Treasuries. Inversions along the curve, where some short-term rates exceed longer tenor yields, point to concerns about a looming economic downturn as the Federal Reserve hikes interest rates to quell high inflation. 

Germany’s two-year rate turned positive for the first time since 2014 and the three-month London interbank offered rate for dollars cracked 1% for the first time in almost two years. 

Among individual moves, Barclays Plc fell as a shareholder sold about 900 million pounds ($1.2 billion) of stock, a day after the lender revealed a costly blunder in how it sold billions of dollars in securities. Apple Inc. rose in premarket trading, heading for the longest winning streak since 2003.

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Global shares have rallied from the lows reached after Russia invaded Ukraine. Such resilience contrasts with a rout in bonds and inverting yield curves, which are shaking economic confidence. Investors are trying to parse developments in the war, elevated commodity costs and the Fed’s fight against price pressures.

“It makes sense to think about those growth risks, but more from a slowdown perspective and not a recession perspective for this year,” Julia Wang, JPMorgan Private Bank global market strategist, said on Bloomberg Television. 

Ukrainian negotiators said there is enough ground coming out of talks to hold meeting between Putin and Zelenskiy after wrapping up discussions in Turkey on Tuesday.

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While signs of strategic splits are emerging from within NATO’s ranks and the U.S. plans to tighten the sanction screws on Russia, the country made a $102 million interest payment as it continues to service its foreign bonds. Russia has offered to buy back dollar debt maturing next week for rubles, without indicating how much of the $2 billion Eurobond it could repurchase. 

Just how frightening is yield-curve inversion? That’s the theme of the MLIV survey this week. Please click here to participate.

Some key events to watch this week:

Philadelphia Fed President Patrick Harker to speak, TuesdayU.S. GDP, WednesdayRichmond Fed President Thomas Barkin to speak, WednesdayChina manufacturing, non-manufacturing PMIs, ThursdayOPEC and non-OPEC ministerial meeting to discuss production targets, ThursdayNew York Fed President John Williams to speak, ThursdayU.S. jobs report, Friday

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Some of the main moves in markets:

Stocks

Futures on the S&P 500 rose 0.9% as of 8:55 a.m. New York timeFutures on the Nasdaq 100 rose 1.2%Futures on the Dow Jones Industrial Average rose 0.8%The Stoxx Europe 600 rose 2%The MSCI World index rose 0.4%

Currencies

The Bloomberg Dollar Spot Index fell 0.7%The euro rose 1.2% to $1.1119The British pound rose 0.5% to $1.3156The Japanese yen rose 0.9% to 122.70 per dollar

Bonds

The yield on 10-year Treasuries was little changed at 2.45%Germany’s 10-year yield advanced eight basis points to 0.65%Britain’s 10-year yield advanced four basis points to 1.66%

Commodities

West Texas Intermediate crude fell 6.1% to $99.45 a barrelGold futures fell 2.6% to $1,895.10 an ounce

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