Stocks slide, oil jumps as peace talks stall

FILE PHOTO - Monitors showing stock index prices and the exchange rate of the Japanese yen against the US dollar are on display at the Tokyo Stock Exchange in Tokyo
FILE PHOTO – Monitors showing stock index prices and the exchange rate of the Japanese yen against the US dollar are seen after the New Year’s ceremony marking the opening of trading in 2022 on the Tokyo Stock Exchange (TSE) amid the coronavirus disease (COVID- 19) marked. Pandemic, in Tokyo, Japan January 4, 2022. REUTERS/Issei Kato

March 18, 2022

By Tom Westbrook

SINGAPORE (Reuters) – Stock markets took a breather on Friday after several days of sizeable gains, while commodities grew jittery over the lack of progress in peace talks between Russia and Ukraine.

Oil surged back above $100 overnight and Brent crude futures were up another 2% to $108.73 in early trade. [O/R] The currencies of commodity exporters rose as a result.

S&P 500 futures fell 0.6% in Asia. MSCI’s broadest index of Asia-Pacific stocks outside of Japan fell 0.6% in early trade but is heading for a 3% weekly gain. Japan’s Nikkei rose 0.2%. [.T]

“It’s very difficult to gain confidence that you can reliably source commodities from Russia or Ukraine,” said Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia in Sydney.

“They will look elsewhere and that tends to be more expensive.”

The war in Ukraine has developed into a grueling siege pattern.

Sentiment was helped by what appeared to be Russia’s payment of a dollar bond coupon – to avoid a default – and earlier comments from Moscow about a deal with Ukraine that is nearing completion.

However, after a fourth straight day of talks between Russian and Ukrainian negotiators, news from both sides suggested an agreement was still a long way off.

Wheat and corn futures, which are sensitive to supply disruptions in the Black Sea, rallied sharply overnight. [GRA/]

The Bank of England also raised interest rates on Thursday, as expected, but cautiously revised its outlook amid fears that the rise in commodities could hurt growth and demand.

Gilts rallied after the decision and sterling fell briefly as traders became less certain about future rate hikes.

The Treasury market is also warning on the outlook as the yield curve flattens and flirts with inversion as investors believe the Federal Reserve’s rate hikes that began on Wednesday will hurt growth. [US/]

Benchmark 10-year yields held steady at 2.1813%.


Wall Street indexes rose overnight to close their biggest three-session percentage gains since November 2020. The S&P 500 and Dow Jones were each up 1.2%, and the Nasdaq was up 1.3%. [.N]

Chinese markets eased into the end of one of the wildest weeks in decades on Friday.

Hong Kong’s Hang Seng followed its worst session in more than six years with its biggest two-day rally since 1998 after China’s chief financial officer vowed to ease policy and a softer approach to market-sensitive reforms going forward.

Investors are now awaiting action to follow his words, and on Friday the Hang Seng opened 1% lower, while mainland blue-chip CSI300 was down 0.5% in early trade. [.HK]

In FX markets, the US dollar faced its first weekly loss in six weeks as hopes of an end to the war buoyed the euro and commodity-exporting currencies benefited from higher prices.

The euro held steady at $1.1093, up 1.7% on the week. The Australian dollar, which was given a boost by Thursday’s excellent jobs data, hit a near two-week high at $0.7394. [AUD/]

The yen is on course for a second consecutive weekly loss of more than 1% and last traded at 118.73 against the dollar.

The Bank of Japan concludes a two-day meeting later on Friday and is expected to remain ultra-loose in contrast to the rest of the world for some time to come.

(Reporting by Tom Westbrook; Editing by Shri Navaratnam) Stocks slide, oil jumps as peace talks stall


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