Alex Brandon/AP Photo (L), Sergei KarpukhinTASS via Getty Images (R)
- Global stocks wobbled Monday after news that Biden and Putin have provisionally agreed to hold talks on Ukraine.
- The summit meeting may help keep a military conflict in Europe off the radar for now, an analyst said.
- Oil prices switched between gains and losses as the market weighed hopes for a diplomatic solution.
Global stocks switched between gains and losses Monday after US President Joe Biden and his Russian counterpart Vladimir Putin agreed in principle to hold a summit on the Ukraine crisis soon.
Biden’s condition for the meeting is that Putin does not invade Ukraine, a scenario that still seems possible after Russian commanders reportedly received orders to invade the neighboring country.
Futures on the Dow Jones and the S&P 500 were broadly flat as of 6:40 a.m. ET, pulling back from a more substantial move higher soon after the summit news. Nasdaq futures reversed gains and slipped 0.25%. The major US stock markets are closed for the Presidents Day holiday on Monday.
Hopes for a diplomatic solution come after stocks closed out last week firmly lower, driven by fears the Ukraine crisis would escalate into war in Europe.
On Sunday, US Secretary of State Anthony Blinken said Russia’s actions suggested it’s on the brink of an invasion, after Russia extended joint military drills in Belarus and multiple reports of extensive troop deployments on Ukraine’s border.
The timing of the Biden-Putin talks will be decided after a meeting between US and Russian ministers on Feb. 24, France’s president Emmanuel Macron said late Sunday.
“After a nervous close to trading last week, sentiment has picked up to start the new week as French President Macron may succeed in brokering a summit between US President Biden and Russian President Putin, possibly helping to keep the prospects of a hot military conflict off the radar for now,” Saxo Bank’s strategy team said in a note.
UBS said in a Monday note that it sees a prolonged military conflict as a low-likelihood risk at this point, given there are high economic costs involved for all parties.
Elsewhere, Asian equities pared losses as investor appetite for risk picked up. Tokyo’s Nikkei fell 0.8%, after trading around 1.3% lower. The Shanghai Composite was flat, while Hong Kong’s Hang Seng was 0.7% lower at the close.
The pan-European Euro Stoxx 600 fell 0.4%, and Frankfurt’s DAX lost 0.3%. London’s FTSE 100 was trading flat.
Safe-haven gold earlier gained ground to reach an eight-month high, but was last slightly lower at $1,899.40 an ounce.
Oil switched between gains and losses as investors weighed hopes for the Ukraine talks. Brent crude futures rose 0.6% to $91.94 a barrel, reversing an earlier fall that came after climb of 1.3%. West Texas Intermediate rose 0.5% to $90.72 a barrel, coming back from a slight dip.
On Sunday, ministers of Arab oil-producing countries said OPEC+ should stick to its current agreement to add 400,000 barrels of oil per day to output, defying calls to pump more and ease prices.
“The Russia/Ukraine situation will almost wholly determine short-term price action, and short of a massive Russian pullback, it is hard to see much downside in oil prices from here,” Jeffrey Halley, senior market analyst at Oanda, said in a note.
Another lingering factor driving recent market sentiment has been uncertainty around the Federal Reserve’s plan to hike interest rates to cool soaring inflation. JPMorgan said at the weekend it now expects the Federal Reserve to hike interest rates for nine meetings in a row.
Data on a key metric watched by US policymakers, the PCE (personal consumption expenditures) is due Friday, and Deutsche Bank economists expect core PCE to come in at 5.5% year-on-year, which would be the fastest pace since the early 1980s.
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