European stocks jump after Russia says some troops are back on base

European stocks rose and oil prices plummeted, after Russia said it had begun pulling some troops back to base after completing military exercises.

Stoxx Europe 600 stock index, which fell nearly 2% on Monday, added 0.9% on Tuesday morning. London’s FTSE 100 was up 0.4% and Germany’s Xetra Dax was up 1.3%.

US stock index futures also rose on Tuesday following the statement from the Russian Defense Ministry. Futures that track the S&P 500 index gained 1.2% while those that track the tech-heavy Nasdaq 100 gained 1.8%.

The protest came after the Russian Defense Ministry said that Russia’s southern and western army units were returning to their bases after completing drills and drills.

The Russian ruble gained 1% against the US dollar, as did Ukraine’s currency, the hryvnia.

Brent crude, the benchmark for oil, fell 2.6% to $94.97 a barrel after surging as high as $96.78 on Monday, its strongest level in seven years. European gas contracts for delivery next month fell 5.2% to €76.25/megawatt hour.

Tensions over Ukraine, which have been growing for more than two months, have come to the fore in global markets after the United States warned last Friday of a potential threat to Ukraine. immediate threat Russia will invade its neighbour.

The potential imposition of Western sanctions on Russia, a key supplier of oil, gas and metals to the global supply chain that has been impacted by Covid-19-related disruptions, has made raised concerns about high inflation and the rapid response of central banks to rate hikes. Consumer prices rose at a record pace in eurozone last month and reached a The highest level in 40 years in the US.

Sergei Lavrov, Russia’s Foreign Minister, on Monday said Moscow was ready to continue dialogue with the West, expressing optimism about a “way forward” in the negotiations. But the White House later hope fades about Moscow looking for a diplomatic path out of the Ukraine crisis, warned that the Russian military is still aggressively planning an invasion of the neighboring country.

Stoxx Europe 600 line chart shows European stocks recovering as Ukraine tensions ease

Haven’s asset fell on Tuesday, with the US dollar index down 0.3%. Yields on the German 10-year Bund, inversely proportional to stock prices, rose 0.03 percentage points to just over 0.3%.

The yield on the 10-year Treasury note rose 0.03 percentage points to 2.02 percent, close to its highest level since late 2019.

Vix, a measure of expected volatility on the S&P 500, has corrected from Monday’s high but remains as high as 26.5.

The Stoxx Index is down more than 4% this year while the S&P is down 7.6%.

“The Russia-Ukraine situation is coming at an inopportune time as markets are already fragile,” said Olivier Marciot, cross-asset fund manager at Unigestion, said Olivier Marciot, cross-asset fund manager at Unigestion. , referring to expectations the US Federal Reserve will raise interest rates up to seven times this year, after pinning borrowing costs near zero in March 2020.

“As a result, the market is very reactive to any bullish news that comes out.”

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