(Bloomberg) — U.S. equity futures climbed Friday and havens like gold and bonds slipped as planned talks between Russia and the U.S. over Ukraine alleviated some investor despondency about geopolitical risks.
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The U.S. said Russian and American officials agreed to meet next week in Europe. S&P 500 and Nasdaq 100 contracts pushed higher and Asian shares pared losses, though key markets like Japan remained slightly in the red.
That was a turnaround from Thursday, when U.S. equities sank — lopping 3% off the tech-heavy Nasdaq 100 — on ramped up Biden administration warnings of a possible Russian attack that Moscow again rejected as unfounded.
The prospect of a meeting coaxed investors out of safer investments, sending Treasury yields back up toward 2% and pulling bullion below $1,900 an ounce — a level it only just scaled for the first time since June. The dollar was steady and the yen slid.
Crude oil dipped as traders balanced the potential return of Iranian barrels — if the nation reaches a nuclear accord with world powers — against the risk of disruption to Russian energy supplies.
Global stocks are set for a second week of losses, sapped by the standoff between Russia and the West over Ukraine as well as the prospect of tightening Federal Reserve monetary policy. Some $2.2 trillion of option expirations set to hit the market Friday may exacerbate volatility.
Bets on a sharper Fed interest-rate liftoff in March have eased somewhat in light of geopolitical tension. But investors continue to be vexed by the question of how markets will cope as stimulus ebbs.
“We’ve been calling for a long time for increased volatility, but when it finally comes it’s nerve wracking for everybody,” Carol Schleif, deputy chief investment officer for BMO Family Office LLC, said on Bloomberg TV.
Fed Bank of St. Louis President James Bullard said bringing down inflation may require the central bank to overshoot a neutral target interest-rate, which he sees as about 2%. Fed Bank of Cleveland President Loretta Mester said she supports hiking rates next month and tightening policy at a faster pace if needed to curb price pressures.
In the speculative fringe of global markets, cryptocurrencies steadied after sharp losses, leaving Bitcoin around $41,000. Digital tokens were bolstered by stabilizing risk appetite in the wake of the latest Ukraine developments.
The recent geopolitical gyrations “have taught us that we are likely to remain in this off-and-on tunnel, whipped around by news, hope and surprise actions,” said Wai Ho Leong, a strategist at Modular Asset Management in Singapore. “It will be like this until there is a fundamental breakthrough in the talks.”
Here are some key events this week:
U.S. Monetary Policy Forum: speakers including Fed officials Charles Evans, Christopher Waller and Lael Brainard, Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
S&P 500 futures rose 0.5% as of 12:02 p.m. in Tokyo. The S&P 500 fell 2.1%
Nasdaq 100 futures rose 0.7%. The Nasdaq 100 fell 3%
Japan’s Topix index fell 0.4%
South Korea’s Kospi index lost 0.3%
Australia’s S&P/ASX 200 index declined 0.6%
Hong Kong’s Hang Seng index fell 0.5%
China’s Shanghai Composite index was steady
The Bloomberg Dollar Spot Index was little changed
The euro was at $1.1366
The Japanese yen was at 115.16 per dollar, down 0.2%
The offshore yuan was at 6.3325 per dollar
The yield on 10-year Treasuries rose three basis points to 1.99%
Australia’s 10-year yield was at 2.23%
West Texas Intermediate crude was at $91.06 a barrel, down 0.8%
Gold was at $1,891.37 an ounce, down 0.4%
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