PremiumIndian indices may witness a positive start on Wednesday. The peace talks between Russia and Ukraine increased hopes of de-escalation of war as Kremlin offered to “cut back" its operations in northern Ukraine. The investors celebrated this progress as indices continued to advance for the second straight day on Tuesday. The indices in Wall Street and Europe also appreciated the progress and made gains between 1% to 3%. The crude prices also fell before climbing again as some investors cautiously assessed Russia's peace offerings. In Asia, shares in Japan declined, while that in Hong Kong, South Korea, Australia, and Shanghai advanced in early trade on Wednesday.
In cryptocurrencies, Bitcoin is taking a pause following a sharp rise in recent days that saw it reach its highest levels of the year. The digital token was trading almost flat at $47,284, down about 0.4%. The world's largest and most popular cryptocurrency is up about 2% in 2022 (year-to-date or YTD) so far. It is about 30% far away from its record high of near $69,000 it had hit in November last year.
Gold prices rose on Wednesday, supported by a dip in the U.S. dollar and Treasury yields, though signs of progress in Russia-Ukraine peace talks dented the metal's appeal as a safe haven and kept gains in check.
Spot gold was up 0.3% to $1,923.95 per ounce by 0210 GMT. U.S. gold futures rose 0.5% at $1,927.70.
The metal fell as much as 1.8% on Tuesday to its lowest since Feb. 28 at $1,889.45.
Asia shares joined a global rally on Wednesday as hopes rose for a negotiated end to the Ukraine conflict, while bond markets signaled concern overnight that aggressive rate hikes could damage the U.S. economy after 10-year yields briefly dipped below two year rates.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1%, and touched its highest level since March 4, with most Asian stock markets in positive territory.
Japan's Nikkei bucked the trend however, falling 1%, as observers pointed to profit taking heading into the end of the fiscal year. The benchmark hit a two-month closing high on Tuesday.
Oil rebounded in Asian trading as investors cautiously assessed the outlook for a de-escalation of Russia’s war in Ukraine, which has entered its second month and rattled markets worldwide.
Futures in New York rose above $105 a barrel after losing more than 8% over the previous two sessions. While Russia offered to “fundamentally cut back" its military operations in northern Ukraine, a person close to the Kremlin said the de-escalation doesn’t mean a cease-fire or complete withdrawal of troops from around the capital, Kyiv. The U.S. also cautioned about declaring progress.
The war in Europe has roiled commodity markets and fanned inflation just as nations were seeking to encourage economic growth after the pandemic. It’s also whipped up extreme volatility, upended trade flows and squeezed already tight energy market, putting oil on track for a fourth monthly gain.
There are also threats to global demand from a virus resurgence in China and increased tensions in the Middle East. OPEC+ meets on Thursday to discuss its supply policy for May, although the group is expected to stick with its strategy of a modest output boost even as Russia’s war in Ukraine disrupts crude flows.
The dollar was kept on the back foot on Wednesday as hopes for a breakthrough in Russia-Ukraine peace talks lifted the euro, while the under-pressure yen steadied even as the Bank of Japan redoubled efforts to pin down bond yields.
The euro, battered in recent weeks by fear of the economic fallout from war in Ukraine and nerves about the risk of the conflict spreading west, touched a two-week high of $1.1137 overnight, before settling back to $1.1091 in Asia.
The common currency also jumped through its 200-day moving average on the pound to hit a three-month high of 84.81 pence, while Russia's rouble surged to a one-month top of 83.50 to the dollar.
Australia is on the brink of finalizing a free-trade agreement with India with an announcement possible in “coming days," as the government works to strike a deal less than two months before an expected May election.
Australian Trade Minister Dan Tehan said that he and his Indian counterpart Piyush Goyal were meeting daily and “getting very close" to reaching a deal. Tehan said he was hopeful that there could be an announcement soon.
Stocks in Asia outside of Japan rose Wednesday as investors weighed prospects for a de-escalation in the war in Ukraine that sent Treasury yields lower. Oil pared gains.
Equities fell in Japan as the yen rose after its recent slide to a six-year low. They rose in Hong Kong and China. U.S. futures wavered after the S&P 500 gained for a fourth day and the Nasdaq 100 climbed as Apple Inc. notched up its longest streak of gains since 2003.
Bonds got a reprieve from their recent rout as hopes for progress in talks between Russia and Ukraine drove down oil prices and inflation expectations. A slide in long-end yields saw the two- to 10-year curve briefly invert -- typically a signal of impending recession, though its accuracy is in doubt after years of heavy stimulus.
Oil modestly reversed some of its slide as investors remained circumspect about the chances of the war being defused. Russia said it will sharply reduce military activity near Ukraine’s capital Kyiv and its chief negotiator said Moscow would take steps to “de-escalate" the conflict. The talks failed to reach agreement on a cease-fire, however, and the Pentagon said Kyiv remains under threat. The dollar slipped.
Malaysia's economy is expected to expand 5.3%-6.3% this year, the central bank said on Wednesday, slightly below an earlier forecast of 5.5%-6.5%.
The country will continue to benefit from global demand growth that would support both investment activity and the labour market, Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said during the bank's Economic and Monetary Review.
Stock markets tore higher across the world on Tuesday and oil prices shed $2 a barrel, as investors celebrated signs of progress in negotiations between Russia and Ukraine that they hoped would lead to a settlement in a five-week conflict.
Even though the U.S. government warned that Russia's latest move was a sign it is redeploying, not withdrawing, troops, investors nonetheless piled into risky assets, ignoring surging inflation and imminent rate hikes that could mar the growth outlook and upend stock market buoyancy.
In a sign that the exuberant stock market may run into headwinds, a closely-watched section of the U.S. yield curve briefly inverted for the first time since September 2019, signalling a possible recession ahead.
Indeed, some analysts warned that the latest bout of optimism may be misplaced.
"Over the last two weeks, the S&P has produced one of its sharpest rallies in history, larger than the biggest 10-day rallies in seven of the S&P's 11 bear markets since 1927," said analysts at Bank of America Global Equity Derivatives Research.
"It has done so despite clearly weaker fundamentals (more hikes, higher inflation, and curve inversion) and the Fed leaning against equity market strength to hike faster," they wrote, adding that they think sustained gains in U.S. stocks are unlikely.
U.S. stock indices jumped over 1%, Europe's main bourses enjoyed 1% to 2.5% gains, and oil tumbled close to $5 at one point as Russia's deputy defence minister emerged saying Moscow has decided to drastically cut military activity around Ukraine's capital Kyiv and also Chernihiv.
U.S. Treasury yields paused their ascent on Tuesday, but have risen an eyewatering 165 basis points this quarter.
Benchmark 10-year U.S Treasuries retreated to 2.391% while the equivalent 2-year yields were at 2.367%. More than 200 basis points of U.S. interest rate rises are also now priced in for 2022 which, if realised, would be the most in a calendar year since 1994.
The Dow Jones Industrial Average jumped 0.97%, the S&P 500 leapt 1.23%, and the Nasdaq Composite climbed 1.8%. MSCI's gauge of stocks across the globe gained 1.54%.
All the three of the main S&P 500, Dow Jones and Nasdaq indexes are on course to end March higher. However, they are also set to record their worst start to a year and indeed any quarter since the start of 2020 when the outbreak of the coronavirus pandemic wreaked havoc on financial markets.
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