Signals of dampening tensions in the Russia/ Ukraine conflict sent stock prices northwards as market participants reappraised the risks associated with the ongoing conflict. Market sentiment picked up in the last 24 hours after a top foreign policy aide to Ukraine’s president said the country is ready to discuss Russia’s demand for neutrality if it’s given security guarantees. Consequently, S&P 500 rose 2.6% to 4,277.88 while Nasdaq went up 3.6% to 13,255. The gains seen across commodity markets have eased, with oil trading back below $111 per barrel with WTI at $110.34 per barrel. Demand for haven assets like USTs and Gold eased as the yield on 10-year Treasuries was stable at 1.93% while Gold traded at around $1,981.55 per ounce, down 0.50%. These turnabouts seen are the latest twist in volatile markets as investors investigate the risk of an inflation shock that could affect global growth, just as the FED prepares what is expected to be the first of many rate increases next week. U.S. CPI data which comes out Thursday is likely to hit another high and though the gains in commodities seem to have dwindled for now, markets are still aware of developments in the Ukraine war and Russian sanctions.
A steady open to bunds following another round of selling on Wednesday as geo-political tensions appear to de-escalate; 10Y DBR yields rose 10.4bps to close 0.216%. The general market optimism was also noticeable in equities with the Stoxx 600 up 4.68%. Peripherals traded weaker however in a bid to unwind the tighter spread; 10Y BTP yields shed 8.3bps to close about 1.592%. The ECB meets today, and market will be looking to see if officials will stick to the plan on unwinding support given geo-political developments.
A meeting between the President Vladimir Putin and the Government may be held today on the nationalization of the assets of foreign companies that suspended business in Russia. About 300 companies have since ceased operations in Russia with Visa and Mastercard the more prominent ones lately. The two will stop servicing Russian cards abroad from March 10th.USDRUB closed at 120 on Wednesday on the MICEX and touched 137 in early Thursday trading. Inflation in Russia rose 2.2% from February 26 to March 4, the highest since 1998. The conciliatory mood appears to be continuing with negotiations between the foreign ministers of Russia Sergey Lavrov and Ukraine Dmytro Kuleba planned in the Turkish city of Antalya.
The SSA sovereign space kicked off the day with another firm start on the back of two days of a strong rally. NGERIA & KENINT so far this morning seem to have a stronger start with their space already up c.0.75pts compared to the likes of ANGOL & GHANA which have opened higher but just c.0.375pts from closing levels of yesterday. Brent has also rebounded from its slump yesterday by c.4% after opening at $112.09/bbl. this morning.