- Crude oil rallies
- US dollar slides
- Gold recovers
Key Events
US futures on the Dow Jones, S&P 500, NASDAQ and Russell 2000 slumped for much of the morning on Wednesday, while European shares extended the rebound seen during today's Asia session as Russia announced it is withdrawing some troops from its border with Ukraine.
Despite trading slightly lower, US Treasury yields remained above 2%.
Global Financial Affairs
European equities on the STOXX 600 climbed for the second day. Traders rotated out of technology into economically sensitive financial and consumer discretionary stocks. Oil companies also retreated.
After missing the rally yesterday, Asian shares finally benefited from the receding concerns that Russia would invade Ukraine. Japan's Nikkei 225 outperformed with a 2.2% jump, after from a two-day decline due to a rally in technology shares that tracked Wall Street. Also, South Korea's KOSPI jumped about 2% on its best day in two weeks. China's Shanghai Composite added 0.57% after the country's inflation eased. Perhaps, investors are unable to decide whether the improving economy will benefit company profits enough to outweigh any damage from tightening policy which could dent corporate profits.
US stocks gained during yesterday's New York session, as Treasuries retreated with the greenback in hopes of a diplomatic solution between Russia, the US and NATO. The Russell 2000 jumped 2.79%, outperforming the major averages, which has been rare since Fed Chair Jerome Powell testified to a Senate committee that inflation was likely to persist and that it was time for the Fed to roll back its emergency stimulus to manage rising costs. Conversely, the Dow, whose listed mega cap value stocks profit from a high-inflation environment, underperformed.
Treasury yields on the 10-year note fluctuated. At the time of writing, bonds had edged lower, extending their decline which pushed yields higher for the third day in a row, for the first time in a month, to their highest level since July 30, 2019. However, yields then retreated to below yesterday's close. Still, rates maintained the gains above the psychological 2% for the second straight day, for now.
Yields have recently completed two bullish patterns, targeting 2.3%.
The dollar fell for a second day.
The greenback extended yesterday's decline after completing an hourly rising wedge, a pattern created when buyers lose patience with a stalling rally.
Gold rebounded from an early decline into a minor rally. While gold's haven status is being scoffed at amid risk-taking on the breather from geopolitical tensions, it also rises on dollar weakness.
Technically, gold is finding resistance by a powerful Bearish Engulfing pattern at the top of a large triangle.
Bitcoin retreated slightly from yesterday's second day of gains.
Technically, the cryptocurrency faces a small H&S bottom versus a much larger one, which we're betting on.
Crude oil advanced on the pullback of Russian troops. However, the API yesterday posted data showing an inventory draw. If the report proves to be in sync with the crude oil inventory figures published by the EIA later today, it will mean the smallest US stockpile since 2018.
Meanwhile, the hourly chart shows a possible rising flag, bearish after the preceding drop, on the potential neckline of a double top.
Up Ahead
- Walmart (NYSE:WMT) reports FY Q4 2022 results on Thursday before the US session.
- On Thursday, US initial jobless claims are released.
- The Philadelphia Fed reports February's manufacturing index figures on Thursday.
Market Moves
Stocks
- The STOXX 600 rose 0.6%
- Futures on the S&P 500 rose 0.2%
- Futures on the NASDAQ 100 rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The MSCI Asia Pacific Index fell 0.1%
- The MSCI Emerging Markets Index rose 0.7%
Currencies
- The Dollar Index fell 0.2%
- The euro rose 0.2% to $1.1383
- The Japanese yen was little changed at 115.70 per dollar
- The offshore yuan was little changed at 6.3344 per dollar
- The British pound rose 0.2% to $1.3562
Bonds
- The yield on 10-year Treasuries was little changed at 2.04%
- Germany's 10-year yield fell to 0.29%
- Britain's 10-year yield fell to 1.57%
Commodities
- WTI crude advanced 0.88% to $92.88 a barrel
- Brent crude rose 0.87% to $94.09 a barrel
- Spot gold rose 0.2% to $1,856.79 an ounce