Stocks fall, oil climbs as Russia downplays progress in peace talks | Financial market news

The S&P 500 retreated after posting the biggest two-day rally since April 2020.

By Bloomberg

Shares tumbled as Russia poured cold water on reports of progress in Ukraine peace talks, adding to worries about the outlook for economic growth amid the most aggressive rate hike campaign of the Federal Reserve in two decades began.

The S&P 500 fell after posting the biggest two-day rally since April 2020 on optimistic economic views from Fed Chairman Jerome Powell. Bonds rebounded, after a sharp sell-off on Wednesday, when part of the Treasury curve – the spread between 5- and 10-year yields – inverted for the first time since the start of the pandemic. It is a betting indicator of future difficulties in economic growth as the inflationary fallout from the war continues. In another volatile session, oil climbed above $100 a barrel.

A Kremlin spokesman said a report of major progress in talks with Ukraine was “wrong”, but added talks would continue. US President Joe Biden will meet with Chinese leader Xi Jinping on Friday. The Russian Finance Ministry said it sent payment orders for interest on its dollar bonds to its correspondent bank. So far, European bondholders of the country’s sovereign debt have received no sign of the funds, although growing optimism that the bonds can be settled is driving prices higher across all maturities.

Credit Suisse Group AG’s global investment committee raised its stock allocation to overweight just three months after cutting it, and said it saw Chinese stocks offer ‘attractive upside potential’ after a record rout . The committee raised US stocks to overweight, citing resilience to risks surrounding Russia’s invasion of Ukraine.

US stocks have continued to climb during periods of rising rates

If recent history is any guide, US equity investors shouldn’t worry too much about the Fed’s decision to start a rate hike cycle. Between June 2004 and June 2006, the authorities raised rates 17 times, with the S&P 500 posting gains of around 12% over the period. The 2015-2018 monetary tightening period was even more positive for risky assets as the index jumped by around 21%.

Output at U.S. factories rose in February by the biggest in four months, indicating firmer momentum in a manufacturing sector still facing supply constraints and higher costs. New home construction rebounded at the fastest pace since 2006, suggesting builders were more successful in managing material and labor constraints during the month.

Elsewhere, the Bank of England has raised its key interest rate for the third consecutive policy meeting, bringing borrowing costs back to pre-pandemic levels and warning that the war in Ukraine could push inflation well down. above 8% later this year. Officials led by Governor Andrew Bailey tempered the outlook by saying further policy tightening “may be” appropriate in the coming months – a relaxation from February’s wording, when they said that such a decision was “likely”.

Some of the major movements in the markets:

Shares

  • The S&P 500 fell 0.3% at 9:30 a.m. PT
  • The Nasdaq 100 fell 0.6%
  • The Dow Jones Industrial Average fell 0.3%
  • The Stoxx Europe 600 fell 0.4%
  • The MSCI World index rose 0.5%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro rose 0.2% to $1.1062
  • The British pound fell 0.3% to $1.3110
  • The Japanese yen was little changed at 118.79 per dollar

Obligations

  • The yield on 10-year Treasury bills fell three basis points to 2.16%
  • The German 10-year rate rose two basis points to 0.41%
  • The UK 10-year yield fell five basis points to 1.58%

Merchandise

  • West Texas Intermediate crude rose 7.1% to $101.82 a barrel
  • Gold futures rose 1.7% to $1,942.10 an ounce

–With help from Sunil Jagtiani, Andreea Papuc, Robert Brand and Michael Msika.

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