European stocks ticked up on Wednesday after US president Joe Biden said there was still “room for diplomacy” to resolve the Ukraine crisis.
The regional Stoxx 600 index added 0.2 per cent, having closed 1.4 per cent higher in the prior session. London’s FTSE 100 traded flat, and Germany’s Dax added 0.4 per cent. France’s blue-chip CAC 40 stock index also rose 0.4 per cent.
The moves came a day after Vladimir Putin eased tensions by saying that Moscow was drawing down some Russian troops from border areas to enable “dialogue” with the west. Joe Biden later told a White House briefing that diplomacy should be given “every chance to succeed”.
Biden noted that Russia had amassed about 150,000 troops along the Ukrainian border and remained “very much in a threatening position”.
US and European equities had rallied on Tuesday while oil prices fell. Yet Mike Zigmont, head of trading and research at Harvest Volatility Management, said the bullish case for equities would be “a tough one to argue” once investors turned their attention away from Ukraine and back to the US Federal Reserve.
The next meeting of the US central bank’s Federal Open Market Committee is scheduled for mid-March, with economists expecting interest rate increases to tackle inflation that rose in January at its fastest annual pace since 1982.
“Investors should be ready for that kind of a policy change,” Zigmont said in a note. “I feel like they are not, however, and they will need to adjust as we approach the announcement.”
In government debt markets, the yield on the US Treasury note was broadly steady at 2.05 per cent — close to its highest level in more than two years. The yield on German’s equivalent Bund rose 0.02 percentage points to 0.33 per cent.
Bond yields move inversely to their prices. Government bonds are often viewed as haven assets during periods of geopolitical uncertainty.
In the UK, fresh data on Thursday showed that inflation had accelerated to its fastest rate in three decades. Consumer prices rose at an annual pace of 5.5 per cent last month, up from 5.4 per cent in December. The UK’s 10-year Gilt yield added 0.01 percentage point to 1.59 per cent.
In Asian equity markets, Hong Kong’s Hang Seng gauge traded 1.5 per cent higher on Wednesday and Tokyo’s Nikkei 225 added 2.2 per cent.
Futures contracts tracking Wall Street’s S&P 500 index rose 0.3 per cent, while those tracking the tech-heavy Nasdaq Composite gained 0.2 per cent.
Brent crude, the oil benchmark, rose 1.3 per cent to $94.45 a barrel, down from a seven-year high hit on Monday.