Investors cheer peace talks between Russia and Ukraine, but prefer a cautious approach
Wall Street equities advanced substantially overnight, moving closer to finishing March in positive territory, with Nasdaq leading the way, adding more than 6% so far this month. Investors cheered peace talks between Russia and Ukraine that were described by both sides as constructive. Meanwhile, US 2-year Treasury yields briefly exceeded yields on the 10-year benchmark note on Tuesday for the first time since 2019. The so-called yield curve inversion is often considered an indicator of a coming recession. Shrugging off yields dynamics, the technology-heavy Nasdaq Composite rallied 1.8%, the Dow Jones Industrial Average added 1%, while the S&P 500 rose 1.2%.
In Asia, stocks were mostly higher, with Japan’s Nikkei 225 bucking the trend to shed 0.8% after fresh data showed that February retail sales declined by 0.8% versus the median market forecast for a 0.3% decrease. Retail sales fell for the first time in five months. On the positive side, the Shanghai Composite Index rose 1.96% while Hong Kong’s Hang Seng added 1.34%. The Kospi in Seoul added 0.2% and Sydney’s S&P-ASX 200 advanced 0.67%.
However, investor optimism started to wane in Europe, as region’s stocks opened lower on Wednesday. While Moscow said it has decided to drastically cut back its military activity near Ukraine’s capital, doubts have set in over the pledge after Pentagon warned the troop movements do not amount to a retreat. As such, the pan-European Stoxx 600 fell 0.5% in early deals. Earlier today, German Economy Minister said the country will not accept any gas contract breaches by Russia, urging consumers and companies to reduce gas consumption.
Elsewhere, the safe-haven dollar remains depressed around the 98.00 mark, shedding 0.4% on the day. The USD index has been losing ground since yesterday as risk rally pushed the prices lower from long-term highs seen around 99.40. Now, traders shift their focus to US four-quarter GDP data and the ADP employment report ahead of the key jobs data due on Friday. Should the figures surprise to the downside, the downside pressure surrounding the greenback will intensify ahead of the weekend.
