Stocks Rise As Oil Falls On Hopes Of Talks With Ukraine

A man wearing a protective mask during the coronavirus disease (COVID-19) outbreak walks past an electronic board displaying the Shanghai Composite Index, the Nikkei Index and the Dow Jones Industrial Average outside a brokerage house in Tokyo, Japan, March 7, 2022. REUTERS/ Kim Kyung-hoon

>Asian stock markets:
S&P 500 futures up 0.3%, Nikkei up 0.8%
Yields rise ahead of expected Fed and Bank of England rate hikes
Dollar climbs to 5-year high against yen as BOJ lags
Oil in the US fell by more than $ 3 per barrel

SYDNEY, March 14 – Most stock markets edged higher and oil fell on Monday amid hopes for progress in Russian-Ukrainian peace talks despite continued fighting as bond markets brace for higher rates in the US and UK this week.

Although Russian missiles struck a large Ukrainian base near the border with Poland on Sunday, both sides were most optimistic about the prospects for talks. More

A chance at peace alone saw S&P 500 stock futures gain 0.3% and Nasdaq futures gain 0.2%. EUROSTOXX 50 futures added 0.9% and FTSE futures added 0.4%.

The Tokyo Nikkei (.N225) rose 0.8%, but Asia Pacific’s broadest MSCI equity index outside Japan (.MIAPJ0000PUS) fell 1.1% due to losses in China.

Chinese blue chips (.CSI300) shed 1.1% after a spike in coronavirus cases sent the southern city of Shenzhen into lockdown, fueling speculation of further policy easing. More

Bonds elsewhere remained under pressure, having suffered losses last week as rising commodity prices look set to push inflation further and 10-year Treasury yields rose three basis points to 2.03%.

It is noteworthy that the key indicator of inflation expectations in the US rose to 3% and approached a record high level.

This only reinforced expectations that the Federal Reserve would raise rates by 25 basis points at its policy meeting this week and signal more to come, according to the Dot Chart members’ forecasts.

“The dots are likely to be mostly clustered around four or five increases for 2022, up from three earlier, given higher inflation since the January FOMC meeting,” said Kevin Cummins, chief US economist at NatWest Markets.

“We suspect that as early as this week we may receive an update on how the Fed plans to reduce the size of the balance sheet.”

The Bank of England is expected to raise its rates to 0.75% on Thursday, the third consecutive increase, and will provide more signals as market prices hit an aggressive 2% by the end of the year. More

Fed futures suggest at least six or seven increases this year to around 1.75%, keeping the US dollar at its highest level since May 2020.

The euro was stuck at $1.0910, not far from its recent 22-month low of $1.0804, while the dollar hit a new five-year high against the yen at 117.82.

The Bank of Japan is far behind other major central banks in tightening policy.

“The yen has failed to show its typical safe-haven attributes, in part due to a significant rise in U.S. yields and the Bank of Japan’s yield curve control policy, which prevents JGBs from following the movement of major global yields,” said Rodrigo Catril, Senior Forex Strategist at NAB. .

“Japan is also a major energy importer, raising concerns about a terms-of-trade shock from higher energy prices.”

On Monday, gold lost some of its attractive safe haven, dropping 0.6% to $1,973 an ounce and peaking last week at $2,069.

Likewise, chances for progress on Ukraine have seen oil prices lose some of their recent gains, even as talks with the Iranian producer seemed to stall. More

Brent crude was last down $3.12 to $109.55, while U.S. crude fell $3.19 to $106.14.

Reporting by Wayne Cole; Edited by Sam Holmes and Sri Navaratnam

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