Stocks steady on diplomatic hopes in Ukraine By Reuters

Written by Tom Westbrook

SINGAPORE (Reuters) – U.S. stock futures rebounded on Friday and selling pressure eased in Asian stock markets after the U.S. Secretary of State agreed to a meeting with Russia’s foreign minister, raising hopes of a diplomatic solution to the East-West crisis over Ukraine.

It jumped 0.5% on the news and Nasdaq futures rose 0.6%. MSCI’s broadest index of Asian shares outside Japan fell 0.5%, but markets in Tokyo, Hong Kong, Sydney and Seoul all trimmed their deeper morning losses.[.T][.HK][.KS][.AX]

US Secretary of State Anthony Blinken has accepted an invitation to meet with Russian Foreign Minister Sergei Lavrov late next week on the condition that Russia does not invade Ukraine, the US State Department said.

It’s better news than we had yesterday,” said Kyle Rhoda, an analyst at IG Markets in Melbourne. But we’ve seen that diplomatic talks haven’t gone anywhere before, and the troops are still on the border, so there are still risks.

Overnight Wall Street fell 2.1% and the Nasdaq fell 2.9% – while gold jumped to an eight-month high – on renewed US warnings of an impending Russian invasion.

Investors fear a wider war could erupt as one of the deepest crises in post-Cold War relations erupts, as Russia wants security guarantees, including that Ukraine will not join NATO.

Overnight, safe haven currencies such as the Japanese yen and Swiss franc rose to two-week highs against the dollar and pulled back a bit in Asian trade. [FRX/]

Similarly, Treasuries gave up some overnight gains, with the benchmark 10-year yield rising 2 basis points to 1.9876%. The two-year bond yield also rose 2 points to 1.4909%. [US/]

Oil and futures prices last fell 0.5% on Friday to $92.47 a barrel, more than 4% from Monday’s peak, and fell 0.5% to $91.26 a barrel. Gold is down 0.4% from its high at $1,889 an ounce. [GOL/]

price races

Concern about the conflict in Ukraine comes with markets already shaken by price expectations that could carry up to seven Fed increases next year.

Louis Federal Reserve Chairman James Bullard on Thursday reiterated his call to raise the federal funds rate to 1% by July to combat stubbornly high inflation and Fed fund futures prices around a 1/3 chance of a 50 basis point rise next month to begin.

Loretta Meester, president of the Federal Reserve Bank of Cleveland, said the pace of rises should be faster than in previous cycles.

“Markets have been particularly volatile lately and just about everyone has adjusted their Fed requests higher,” said NatWest Markets strategist Jan Nefrozi.

“The consensus appears to be between 5 (our view) and 7 (each meeting) highs and I think the correct number is somewhere in between. Given the trend of strong growth and high inflation, it wouldn’t be too surprising to see a walk at every meeting from now on,” said Nefrozi. onwards”.

Japan on Friday posted its fifth consecutive month of inflation, with energy prices posting their biggest annual rise in 41 years.

Elsewhere in the currency markets, the dollar held its bid and settled at $1.1359 per euro and $0.7181 per euro.

(This story is corrected to add a dropped word in paragraph 3)