U.S. equity futures turned higher and Asian stocks pared losses Monday on a report that a French proposal for a summit between President Joe Biden and Russian counterpart Vladimir Putin has been accepted by both sides.
Nasdaq 100 contracts erased an earlier drop of more than 1% and S&P 500 futures also turned green. Stocks in Japan, Australia and South Korea came off their lows.
Treasury futures gave up some gains, as did Australian and New Zealand bonds. Cash Treasuries won’t trade because of a U.S. holiday. Gold retreated back below $1,900 an ounce and the dollar slipped.
Markets are on edge over the threat of Russian military action against Ukraine, with investor appetite for risk buffeted by the steady stream of headlines about diplomatic moves to tackle the crisis.
One key question is what might happen to supplies of energy, grain and some metals if the Ukraine situation deteriorates. Crude oil remained higher as traders weighed those worries and the potential for a return of Iranian barrels.
The U.S. has told allies that a Russian invasion of Ukraine could target multiple cities beyond the capital, Kyiv. Biden said on Friday he’s convinced Putin has decided to move against Ukraine. Moscow continues to deny it plans to invade.
The standoff, along with the worry that tightening Federal Reserve monetary policy could choke growth in the world’s biggest economy, raise the likelihood of more swings in markets in an already volatile year.
“Global data and central banks’ stance on tightening are all taking a backseat to Ukraine, with markets nervously awaiting the next headline,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada. “Thinner liquidity because of the U.S. holiday adds to the anxiety.”
Two top Federal Reserve officials at the end of last week backed raising interest rates in March to curb the hottest inflation in 40 years. They also supported starting balance-sheet reduction in coming months. JPMorgan Chase & Co. said the Fed is likely to raise rates by 25 basis points at nine consecutive meetings.
The Fed’s key inflation metric may have accelerated to a fresh four-decade high in January, data this week is expected to show.
In cryptocurrencies, Bitcoin held a retreat from the weekend and was trading around $38,000.
China’s stocks will be closely watched amid fresh attempts by the government to crack down on the private sector and more default warnings from developers. A gauge of Chinese stocks traded in the U.S. tumbled Friday.
In China, banks kept loan prime rates steady after a cut in January.
Here are some events to watch this week:
- Russia’s Foreign Minister Sergei Lavrov has agreed to meet U.S. Secretary of State Antony Blinken this week in Europe
- Fed Governor Michelle Bowman speaks Monday
- China property prices, loan prime rates Monday
- New Zealand rate decision Wednesday
- BOE Governor Andrew Bailey appears before the Treasury Committee Wednesday
- Bank of Korea policy decision Thursday
- EIA crude oil inventory report Thursday
- Fed officials Loretta Mester and Raphael Bostic speak Thursday
- U.S. new home sales, GDP, initial jobless claims Thursday
- U.S. consumer income, U.S. durable goods, PCE deflator, University of Michigan consumer sentiment Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.3% as of 10:16 a.m. in Tokyo. The S&P 500 fell 0.7% Friday
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 1.1% Friday
- Japan’s Topix index fell 0.8%
- Australia’s S&P/ASX 200 Index was steady
- South Korea’s Kospi index fell 0.7%
- Hang Seng Index futures lost 0.8% earlier
- The Japanese yen was at 115.05 per dollar
- The offshore yuan traded at 6.3264 per dollar
- The Bloomberg Dollar Spot Index fello 0.1%
- The euro was at $1.1332
- The yield on 10-year Treasuries declined three basis points to 1.93% Friday
- Australia’s 10-year yield fell three basis points to 2.21%
- West Texas Intermediate crude rose 0.2% to $91.24 a barrel
- Gold was at $1,897.42 an ounce
–With assistance from Garfield Reynolds.