Market Analysis

Global Market Boosted by Ukraine Peace Prospects, Euro Up

Amos Simanungkalit · 13 Feb753.2K Views

Image Credit: Reuters

U.S. and European stock futures surged on Thursday, driven by optimism surrounding the possibility of a peace agreement between Ukraine and Russia. This momentum helped offset a rise in Treasury yields, as higher inflation dampens expectations of any policy easing this year.

Trade concerns continued, as U.S. President Donald Trump announced plans to impose reciprocal tariffs on countries that charge duties on U.S. imports, with action expected by Wednesday or Thursday. Gold prices climbed back toward the record levels seen on Tuesday, boosted by phone calls between Trump, Russian President Vladimir Putin, and Ukrainian President Volodymyr Zelenskiy, sparking hopes that the prolonged war could soon come to an end.

Oil prices dropped for a second consecutive day, testing key support levels, while European markets saw gains, with EUROSTOXX 50 futures rising 1%.

U.S. stock futures also moved higher, with Nasdaq futures increasing by 0.4% and S&P 500 futures up by 0.2%. Japan's Nikkei rose 1.4%, driven by a weaker yen, and MSCI’s index of Asia-Pacific shares outside Japan gained 1.2%, hitting its highest point since early December.

The optimism surrounding peace talks appeared premature to some, with Kyle Rodda, a senior analyst at Capital.com, noting the significant movement in European assets but cautioning against overconfidence. Chinese blue-chip stocks rose by 0.2%, while Hong Kong’s Hang Seng index climbed 2.5%, marking a four-month high.

On the economic front, U.S. inflation data showed that consumer prices rose by the largest amount in 1.5 years in January, with core inflation rising 0.4%, higher than the 0.3% expected. This contributed to a surge in Treasury yields, with 10-year yields hitting a three-week high of 4.66%, before easing slightly to 4.6092%.

Despite the data, Barclays analysts still expect one rate cut from the Federal Reserve this year, though they noted that risks are now tilted toward no rate cuts and even the possibility of rate hikes. In the foreign exchange market, the dollar lost 0.2% to 154.15 yen, following a 1.3% rise the previous day. The yen was the biggest loser as U.S. yields rose.

In commodities, oil prices extended their losses as the prospect of a peace deal between Russia and Ukraine raised hopes of an end to sanctions that have disrupted supply chains. U.S. crude dropped 1% to $70.64 per barrel, while Brent fell 1% to $74.43 per barrel. Gold prices increased by 0.5%, nearing their record high of $2,942.70 reached earlier in the week, at $2,918 per ounce.