SYDNEY: Most stock markets firmed on Monday on hopes of progress in Russia-Ukraine peace talks and oil plunged as fighting continued, while bond markets in the United States and Britain raised rates this week.
While Russian missiles struck a large Ukrainian base near the border with Poland on Sunday, the two sides gave their most upbeat assessment yet about the prospects for talks.
S&P 500 stock futures were up 0.3% on the same day of calm, while Nasdaq futures were up 0.2%. EUROSTOXX 50 futures rose 0.9% and FTSE futures gained 0.4%.
Tokyo’s Nikkei rose 0.8%, but MSCI’s broadest index of Asia-Pacific shares outside Japan was pulled down 1.1% from losses in China.
Chinese blue chips fell 1.1% after coronavirus cases closed the southern city of Shenzhen and fueled speculation about more policy easing.
Bonds remained under pressure last week as rising commodity prices would further boost inflation, with the 10-year treasury yield rising three basis points to 2.03%.
Notably, a key measure of US inflation expectations climbed near 3% and a record high.
It only cemented expectations that the Federal Reserve would raise rates by 25 basis points at its policy meeting this week and prompt members’ “dot plot” forecasts for more to come.
“Given the fast pace of inflation since the January FOMC meeting, the dots will be primarily clustered around four or five hikes for 2022,” said Kevin Cummins, chief US economist at NatWest Markets.
“We suspect we may even get an addendum about how the Fed plans to reduce the size of the balance sheet as early as this week.”
The Bank of England is expected to raise its rates to 0.75% on Thursday, the third consecutive increase, and with market pricing indicating an aggressive 2% by the end of the year.
Fed funds futures mean six or seven lows this year have risen to around 1.75%, taking the US dollar to its highest level since May 2020.
The euro was stuck at $1.0910, and not far from its recent 22-month trough of $1.0804, while the dollar hit a new five-year high at 117.82 on the yen.
The Bank of Japan appears to lag far behind other major central banks in tough policy.
“The yen has been unable to display its distinctive safe-haven characteristics, partly due to the large increase in US yields and the BoJ yield curve control policy that restrains the JGB following the rise in core global yields,” said Rodrigo Catril, a senior he said. FX Strategist at NAB.
“Japan is also a big energy importer which adds to concerns over the terms of the trade shock from high energy prices.”
Gold lost some of its safe-haven charm on Monday, falling 0.6% to $1,973 an ounce and closing at $2,069 at last week’s high.
Similarly, Ukraine saw an opportunity for progress oil prices Surrender a bit of your recent gains, even if talks with producer Iran seem to have stalled.
While Russian missiles struck a large Ukrainian base near the border with Poland on Sunday, the two sides gave their most upbeat assessment yet about the prospects for talks.
S&P 500 stock futures were up 0.3% on the same day of calm, while Nasdaq futures were up 0.2%. EUROSTOXX 50 futures rose 0.9% and FTSE futures gained 0.4%.
Tokyo’s Nikkei rose 0.8%, but MSCI’s broadest index of Asia-Pacific shares outside Japan was pulled down 1.1% from losses in China.
Chinese blue chips fell 1.1% after coronavirus cases closed the southern city of Shenzhen and fueled speculation about more policy easing.
Bonds remained under pressure last week as rising commodity prices would further boost inflation, with the 10-year treasury yield rising three basis points to 2.03%.
Notably, a key measure of US inflation expectations climbed near 3% and a record high.
It only cemented expectations that the Federal Reserve would raise rates by 25 basis points at its policy meeting this week and prompt members’ “dot plot” forecasts for more to come.
“Given the fast pace of inflation since the January FOMC meeting, the dots will be primarily clustered around four or five hikes for 2022,” said Kevin Cummins, chief US economist at NatWest Markets.
“We suspect we may even get an addendum about how the Fed plans to reduce the size of the balance sheet as early as this week.”
The Bank of England is expected to raise its rates to 0.75% on Thursday, the third consecutive increase, and with market pricing indicating an aggressive 2% by the end of the year.
Fed funds futures mean six or seven lows this year have risen to around 1.75%, taking the US dollar to its highest level since May 2020.
The euro was stuck at $1.0910, and not far from its recent 22-month trough of $1.0804, while the dollar hit a new five-year high at 117.82 on the yen.
The Bank of Japan appears to lag far behind other major central banks in tough policy.
“The yen has been unable to display its distinctive safe-haven characteristics, partly due to the large increase in US yields and the BoJ yield curve control policy that restrains the JGB following the rise in core global yields,” said Rodrigo Catril, a senior he said. FX Strategist at NAB.
“Japan is also a big energy importer which adds to concerns over the terms of the trade shock from high energy prices.”
Gold lost some of its safe-haven charm on Monday, falling 0.6% to $1,973 an ounce and closing at $2,069 at last week’s high.
Similarly, Ukraine saw an opportunity for progress oil prices Surrender a bit of your recent gains, even if talks with producer Iran seem to have stalled.