Market sentiment improved amid the reports that Russian troops are returning to bases
Wall Street stocks came off session lows but finished mostly lower on Monday, with financial and health care companies leading losses. Investors stay nervous amid heightened geopolitical tensions. On this front, Washington moved to close its embassy in Ukraine on Monday. Adding to a cautious tone, market players continued to digest fresh hawkish signals from the Federal Reserve. Earlier in the day, Fed President James Bullard said that the central bank needed to fight inflation more aggressively. As such, the S&P 500 and the Dow Jones fell 0.4% and 0.5%. respectively, while the Nasdaq Composite fell less than 0.1% after being up nearly 1% earlier in the session.
In Asia, equity markets were mostly lower on Tuesday as investors continued to assess the implications of a potential Russian invasion of Ukraine after the US issued another warning on Monday that Russia could soon invade its neighbor. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.5%. Japan’s Nikkei 225 fell 0.79%, Australia’s S&P/ASX 200 closed down 0.51% and Hong Kong’s Hang Seng index slid 0.8%.
European stock markets rose as the overall market sentiment improved amid the reports that Russian troops are returning to bases. As risk trades jumped, the pan-European Stoxx 600 index climbed 1.2%. Russian President Vladimir Putin and German Chancellor Olaf Scholz are set to hold talks later today. Should the two leaders express a peaceful tone, risk sentiment will keep improving in the short term.
Meanwhile, the dollar is mostly lower today, with the pressure intensifying in recent trading as risk-on tone reemerges. As such, EURUSD is now back above both the 1.1300 figure and the 20-DMA, extending gains to the 1.1350 intermediate resistance. Later today, the ZEW survey and the Eurozone GDP data could affect short-term dynamics in the common currency, but geopolitics would stay in the market focus.
