NATO has not seen a sign of Russian troop reduction
Wall Street stocks advanced overnight, snapping a three-day losing streak, as Russia said it had pulled back some troops from the Ukrainian border. This step helped ease some worries about the conflict between the two countries. Also, investors continue to assess rising inflationary pressures in the United States in the context of Fed tightening. On Tuesday, the report showed that producer prices rose 9.7% on a 12-month basis. As such, the S&P 500 climbed 1.6%, the Dow Jones gained 1.2%, while the tech-heavy Nasdaq Composite added 2.5%.
Asian equities were higher on Wednesday as fears of a Russian invasion of Ukraine this week dissipated. MSCI’s broadest index of Asia-Pacific shares outside Japan surged 0.9% after a rally in US and European stocks on Tuesday. Japan’s Nikkei 225 soared 2.2% to recover from two days of falls, while Australia’s S&P/ASX200 gained 1.08%. Shanghai Composite added 0.57% despite the data showing China’s factory-gate and consumer price inflation both came in lower than expected in January. Still, geopolitics remains in market focus, and it looks like tensions could rise again at any point so investors could turn more cautious in the near term.
In Europe, stock markets opened higher today, but risk demand has been waning already. While Russia continues to reaffirm that they are pulling back troops after military drills, EU’s von der Leyen said in his latest remarks that NATO has not seen a sign of Russian troop reduction. Earlier in the day, the UK defense minister also noted that they have not seen any evidence of Russian withdrawal. Against this backdrop, US stock index futures were slightly lower in early premarket trade on Wednesday.
Meanwhile, the greenback stays under pressure versus high-yielding and commodity currencies while rising versus the Japanese yen and the Swiss franc. USDJPY stays firmly above the 115.00 figure but refrains from challenging yesterday’s highs just below the 116.00 barrier. Should risk aversion reemerge, however, the pair will come back under pressure in the near term.
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