Home ›› 17 Feb 2022 ›› Stock
World stocks crept higher on Wednesday for the second day in a row and safe-haven assets such as government bonds lost ground, though market moves were checked by Western scepticism that Russia had indeed pulled back troops from Ukraine's borders.
Markets are looking for any sign that one of the deepest crises in East-West relations for decades is starting to ebb and have seized on Moscow's announcement of a partial pullback, even while US President Joe Biden warned there was no proof.
MSCI's global equity index (.MIWD00000PUS) rose 0.4 per cent, following Tuesday's 1.3 per cent bounce, which snapped a three-day losing streak.
However, sharp gains seen on Asian equity markets earlier on Wednesday faded in the European session, with the STOXX 600 pan-European equity index (.STOXX) ceding an early rise to stand flat by 1200 GMT.
Wall Street too is now indicated to open flat , (.NQc1) as traders await the release of minutes from the Federal Reserve's last meeting and a raft of US economic data.
"The surprise element is gone, the market has already priced in a certain deterioration in the situation," said Peter Kinsella, head of FX at Swiss private bank UBP.
"Given where oil is trading, the rouble should be at 65-66 against the dollar so an awful lot is priced in and the same is true of equities in Europe," Kinsella said, estimating that gold too was trading with a $100 premium to current fair value.
The rouble rose modestly to 75 per dollar after strengthening 1.3 per cent on Tuesday .
But while immediate war fears waned - Russia published video that it said showed tanks and military vehicles leaving annexed Crimea - tensions remain high.
Ukraine hinted Russia was behind a series of cyber attacks on Tuesday and Russia's parliament urged the government to recognise two breakaway Ukrainian regions as independent.
All that would keep markets jittery, said Chris Weston, head of research at brokerage Pepperstone in Melbourne.
"News flow can still shift rapidly, and I suspect there'll be more twists and turns that suggest geopolitical hedges – long crude, gold, volatility, and short risk - can make a comeback," Weston said.
Gold, which on Tuesday hit the highest level since June last year at around $1,879 per ounce, is now around $1,852 . Brent crude rose $1 a barrel but stayed off seven-year highs hit on Monday
With geopolitical tensions easing, focus may grow on inflation readings amid speculation the US Federal Reserve and its peers may go faster and bigger with interest rate rises.
UK data showed consumer prices increased at the fastest annual pace in nearly 30 years, reinforcing chances the Bank of England will raises rates for a third meeting in a row.
