Comments suggesting a ‘positive shift’ in talks between Russia and Ukraine from President Vladimir Putin have US stocks looking at a sharply higher open Friday.
U.S. equity futures powered higher Friday, alongside upside moves for oil prices and Treasury bond yields, as Wall Street reacted to comments from Russian President Vladimir Putin that suggest progress in talks to broker peace with Ukraine.
Putin told reporters in Moscow, following a meeting with Belarus President Alexander Lukashenko, that there have been “certain positive shifts” in negotiations with Kyiv. Earlier this week, President Volodymyr Zelenskiy said he was will to compromise on certain positions, including Ukraine’s ambitions to join the NATO alliance.
The comments added more movement to another volatile week of headline risk from Russia’s war on Ukraine, which have been accentuated by signals of central bank tightening amid surging global inflation.
Satellite photos suggest Russian troops are re-grouping on the outskirts of Kyiv, the Ukrainian capital, as fighting in the region enters is seventeenth day. U.K. officials have warned that an assault on Kyiv could come as early as next week, even as European Union leaders meeting in France’s Versailles Palace to agree their next move on sanctioning Russia and providing support for the Ukraine government.
President Joe Biden, meanwhile, is reportedly ready to ask G-7 leaders to strip Russia of its ‘most favored nation’ trading status, a move that would allow for even deeper economic sanctions on Moscow and pressure Putin to end the three week offensive.
On Wall Street, bets on central bank tightening are starting to creep higher following yesterday’s reading of February inflation, the highest in 40 years, and a move by the European Central Bank to end its emergency bond-buying program in the coming months.
The CME Group’s FedWatch tool suggests a 40.8% chance of two Fed rate hikes over the next two months, up from 37.5% earlier this week, while benchmark 2-year note yields rose to 1.713%, the highest since 2019, in overnight trading.
Still, Putin’s comments are adding fuel to stock futures in pre-market trading, with contracts linked to the Dow Jones Industrial Average are indicating a 355 point opening bell gain while those linked to the S&P 500, which is down 10.6% for the year, are priced for a 50 point bump.
Nasdaq Composite futures are indicating a 200 point gain as benchmark 10-year Treasury note yields hold at $1.992% in overnight trading.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies and acts as a safe-haven destination when headline risk is elevated, fell 0.4% to 98.404 in the wake of Putin’s remarks.
In terms of individual stocks, Oracle (ORCL) – Get Oracle Corporation Report shares fell 3% after the cloud-focused software group posted weaker-than-expected third quarter earnings that were offset by a solid near-term outlook.
Rivian Automotive (RIVN) – Get Rivian Automotive, Inc. Class A Report shares fell 11.3% after the upstart EV maker warned that supply chain issues would halve its 2022 production forecasts following a wider-than-expected fourth quarter loss of $2.5 billion.
Docusign (DOCU) – Get DocuSign, Inc. Report, meanwhile, plunged 19% after the online signature vending group forecast weaker-than-expected full year revenues that offset solid fourth quarter earnings.
In overseas markets, Europe’s Stoxx 600 was marked 1.84% higher in mid-day trading in Frankfurt while the region-wide MSCI ex-Japan index in Asia fell 1.33% prior to the market’s reaction to Putin’s comments.
