Volatile stocks and oil ahead of Russia-Ukraine NATO summit

  • Rough splits ahead of NATO summit on Russian-Ukrainian war
  • Bond yields start to rise again in a volatile market
  • Oil remains above $120 a barrel
  • Eurozone PMI stronger than expected

LONDON, March 24 (Reuters) – Global stock markets were choppy on Thursday as the Russia-Ukraine war kept oil above $120 a barrel, as “stagflation” concerns rose on new talk of aggressive US interest rate hikes and slowing growth.

Major European stock indexes barely moved and government bond yields edged higher towards multi-year highs hit earlier in the week as March PMI data came in reassuringly robust. Read more

The focus was also on a special NATO summit Thursday in Brussels, which US President Joe Biden will attend, to discuss new responses to the Russian invasion of Ukraine, which Moscow calls a “special military operation”. “. Read more

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Rabobank’s head of macro strategy Elwin de Groot said markets will be watching closely what emerges, particularly how unified NATO members remain and what Biden can offer European countries to help them. to wean off Russian gas.

“The NATO meeting is certainly important,” de Groot said. “At a minimum, you would expect members to come up with preparations for a possible further escalation of the war in Ukraine.”

Wall Street futures rose 0.6% ahead of trading there, but the mood appeared to be changing.

MSCI’s broadest non-Japan Asia-Pacific equity index (.MIAPJ0000PUS) recouped some of its early losses overnight, but ended down 0.6% after further declines in China and Japan. Hong Kong (.HSI).

The Japanese Nikkei (.N225) bucked the trend, rising 0.25% to a nine-week high as its exporters cheered the yen falling to its lowest against the dollar since 2015. L2N2VR0D6

As of 10:00 GMT, the dollar was up 0.4% against the yen, at 121.65, on expectations that the Bank of Japan will be far behind other major central banks in raising interest rates.

FALCON

Driving some of the volatility, Federal Reserve policymakers signaled on Wednesday that they are ready to take more aggressive action to bring down inflation, which has been high for decades, including a possible rise in rate by half a percentage point at the next political meeting in May. Read more

These signals caused the three major US equity benchmarks to fall 1% overnight.

“The sharp hawkish repricing of Fed rate hike expectations has primarily benefited the US dollar against low-yielding currencies whose own national central banks are expected to lag well behind the Fed in policy tightening,” he said. writes MUFG currency analyst Lee Hardman in a note to clients.

Oil and gas markets also remained hot amid geopolitical uncertainty.

Russian President Vladimir Putin said on Wednesday that Moscow would seek payment in rubles for gas sold to “unfriendly” countries, shaking energy markets, although Italian President Mario Draghi said he planned to continue to pay in euros. Read more

Brent crude futures were little changed at $121.67 a barrel and US West Texas Intermediate futures fell 41 cents, or 0.35%, to $114.5 a barrel.

The bond market was beginning to change again with the benchmark 10-year Treasury yield rising to 2.37% and German Bunds rising 0.52%.

“Inflation is really the big driver,” Rabobank’s de Groot said, adding that it was also behind the drop in consumer confidence.

European leaders are expected to agree at a two-day summit from Thursday to jointly buy gas, as they seek to reduce their dependence on Russian fuels and provide a buffer against supply shocks. But the bloc remains unlikely to sanction Russian oil and gas. Read more

Gold was slightly lower at $1,942.9 an ounce.

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Reporting by Marc Jones; Editing by William Mallard

Our standards: The Thomson Reuters Trust Principles.

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