LONDON (Reuters) – European stock markets rose on Wednesday as investors paused after three days of selling, while oil prices slipped back from their highs.
Russia accused the United States of declaring economic war, after US President Joe Biden announced a ban on Russian oil exports on Tuesday. Read more
Western sanctions isolated Russia from global trade and financial markets in response to its invasion of Ukraine.
But after three days of losses, the global stock index MSCI (.MIWD00000PUS)Which measures stocks in 50 countries, it was up 0.7% on the day at 1224 GMT.
The European STOXX 600 Index is up 3.1%. (.stoxx) Wall Street futures also rose.
Peter McCallum, interest rate analyst at Mizuho, said the stock rebound was a temporary rebound that could be attributed to the news of the talks between Russia and Ukraine. Read more
“People think we may have seen the worst of the escalation for the foreseeable future,” he said, describing today’s rebound as a “consolidation.”
“Maybe the markets are less panicked about the escalation of conflict into other regions than they did at the start of the week.”
Analysts viewed the bounce as a technical correction, rather than signaling a tangible change in sentiment over the conflict, Europe’s largest since World War II.
“For now, the markets are comforted by the fact that we have not received any new bearish news since yesterday’s announcement of a ban on oil imports from Russia,” said Fouad Razakzadeh, Market Analyst at Think Markets.
“Markets have been very oversold… This is also typical of a bear market when you sometimes see gains of multiple percentage points in a short period of time as short positions are squeezed, before the rally loses steam and the downtrend resumes.”
Goods “shipped”
The Russian invasion and the sanctions that followed wreaked havoc on global supply chains, driving up prices in commodity markets. Read more
Oil prices rallied after the US ban, which Goldman Sachs analysts said was already priced, but by 1238 GMT on Wednesday it had fallen somewhat. Read more
Brent crude futures were at $124.78 a barrel, down 2.5% on the day
In the past two weeks, the war has caused the highest inflation in commodity prices in more than 60 years, JPMorgan analysts said.
“Russia has dominant supply centers in: nickel, palladium, platinum, rhodium, aluminum and copper,” JPMorgan said.
Dan Scott, chief investment officer at Vontobel, said “turbo-charged” commodity price inflation was leaving central banks in a “difficult situation.”
“War is inflationary and this war in particular is very inflationary…not just in terms of energy and oil and gas, but it is inflationary across the commodity complex.”
“Grain prices do not interact with central bank policy, nor do nickel prices necessarily… Raising interest rates will not have a direct effect.”
The London Metal Exchange intervened on Tuesday to calm the nickel market after prices jumped within hours to more than $100,000 a ton. Read more
After a four-session rally, gold fell on Wednesday as markets became less risk averse.
The safe-haven dollar fell 0.5% to 98.572 against a basket of currencies.
German government bond yields rose ahead of Thursday’s European Central Bank meeting.
The 10-year US Treasury yield was slightly higher at 1.9061%.
Elsewhere, bitcoin led a rally in cryptocurrencies after an apparently prematurely posted statement on the US Treasury’s website allayed concerns about a sudden tightening of US rules on these assets. Read more
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(Elizabeth Howcroft reports). Additional reporting by Samuel Indyk. Editing by John Stonestreet and Chizu Nomiyama
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