Home ›› 10 Feb 2022 ›› Stock
World stock markets rallied on Wednesday, putting aside worries about rising interest rates for now to take some comfort from positive headlines coming out of Ukraine and upbeat earnings.
The pan-European STOXX 600 climbed almost 1.5 per cent. That followed a strong session in Asia, where MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.5 per cent to a two-week high and the blue-chip Nikkei closed 1.08 per cent higher.
US stock futures pointed to a strong open for Wall Street, where shares ended sharply higher on Tuesday.
News headlines over recent days suggesting tensions between the West and Russia over Ukraine may be easing and a string of upbeat earnings appeared to be lifting sentiment towards risk assets, and a selloff in bond markets abated.
French President Emmanuel Macron, who met Russian President Vladimir Putin on Monday, said on Tuesday he believed steps can be taken to de-escalate the crisis in which Russia has massed troops near Ukraine but says it does not plan an attack.
On the earnings front, French fund manager Amundi on Wednesday posted a strong rise in earnings, quarterly results from British drugmaker GSK beat forecasts, while Dutch bank ABN Amro reported a higher-than-expected net profit of 552 million euros for the fourth quarter.
"Last few days have seen positive headlines over Russia/Ukraine with negotiations between Macron and Putin and reports of German efforts to deescalate the crisis," said Mohit Kumar, managing director, interest rates strategy, Jefferies.
"But we retain our view that a greater concern for risky assets is a removal of central bank accommodation as markets have become used to abundant liquidity and low rates for a long period of time."
Major central banks have become more hawkish in the face of stickier than anticipated inflation.
Barring any big surprises, Thursday's US consumer price index should cement expectations the Federal Reserve will raise interest rates next month, with a strong print offering further support to those tipping a larger 50 basis point rise.
Japan's 10-year government bond yield touched 0.215per cent, its highest since January 2016.
But after sharp sell-off, broader bond markets appeared to a win a respite.
In early London trade, the US 10-year Treasury yield was down about 3 basis points at 1.92per cent but not far off the highest levels since late 2019 hit on Tuesday.
Germany's 10-year Bund yield was 5 basis points lower on the day at 0.21 per cent.
Last week's hawkish stance by the European Central Bank has left Bund yields 20 bps higher in the month so far and on track for their biggest monthly rise in a year.
