Stocks advance with bond yields amid ‘soft’ sanctions

Bloomberg

European equities rose with US futures on Wednesday as investors assessed limited initial Western sanctions against Russia amid the Ukraine standoff.
The Stoxx 600 Europe Index and S&P 500 futures both added about 0.8% while contracts on the Nasdaq 100 gained more than 1%. The mood was brighter, when the S&P 500 fell into a technical correction after sliding 10% from a January peak.
US President Joe Biden said Russia had started to invade Ukraine and announced steps targeting Russia’s sale of sovereign debt abroad, its elites and a pair of banks.
The sanctions — and others by US allies — stopped short of sweeping measures, though officials warned they could be scaled up.
“The softer-than-feared sanctions somewhat help lifting the mood,” Ipek Ozkardeskaya, senior analyst at Swissquote, wrote in a note. “The risk appetite is limited, of course, except in some key assets including oil and commodities.”
Treasuries extended declines after the yield curve flattened in the Wall Street session. Crude oil fluctuated, while gold dipped as haven demand eased. The dollar slipped.
Fears that the Ukraine tension could snarl commodity supplies has bolstered everything from energy to wheat and nickel. Oil wavered as traders evaluated those risks as well as the potential return of Iranian barrels.
Markets were already grappling with the prospect of
tightening Federal Reserve monetary policy to fight high inflation before the Ukraine crisis flared. A key question is whether or not the jump in raw material costs stirred by the standoff will spur a more aggressive initial Fed hike.
President Vladimir Putin has denied Russia intends to invade, but lawmakers have given him the green light to deploy troops to separatist-held regions. Top US diplomat Antony Blinken later announced that a summit due this week with Russian Foreign Minister Sergei Lavrov had been cancelled.
Instead of a sweeping package that crippled top Russian banks, cut its financial transactions off from the global economy, or personally singled out Putin, the US and its allies settled on a modest “first tranche” of penalties.
German officials halted certification of the Nord Stream 2 pipeline, an $11 billion project that would have solidified Russia’s grip on Europe’s energy sector. EIA crude oil inventory report expected on Thursday.
Fed officials Loretta Mester and Raphael Bostic speak on Thursday.
US consumer income, US durable goods, PCE deflator, University of Michigan consumer sentiment on Friday.
The Stoxx Europe 600 rose 0.8% in London. Futures on the S&P 500 rose 0.8%. Futures on the Nasdaq 100 rose 1.1%. Futures on the Dow Jones Industrial Average rose 0.7%. The MSCI Asia Pacific Index rose 0.3%. The MSCI Emerging Markets Index rose 0.4%.
The Bloomberg Dollar Spot Index fell 0.2%. The euro rose 0.2% to $1.1343. The Japanese yen was little changed at 115.03 per dollar. The offshore yuan rose 0.2% to 6.3101 per dollar. The British pound rose 0.2% to $1.3616.
The yield on 10-year Treasuries advanced four basis points to 1.98%. Brent crude was little changed. Spot gold fell 0.2% to $1,895.60 an ounce.