Stocks decline, oil rises as Russia promise in doubt

Bloomberg

Stocks fall and energy prices rose as skepticism about Russia’s promise to de-escalate the war in Ukraine renewed concerns about higher raw material prices and commodity disruption.
Europe’s Stoxx 600 snapped a three-day winning streak after surging to the highest level in five weeks. US futures slipped amid warnings that gains of the past two weeks have the hallmarks of a bear-market rally and concerns that the Treasury curve signals a looming recession.
The dollar slipped, the euro climbed and the yen bounced from a six-year low after the Bank of Japan pledged to buy more securities than planned and include longer-dated debt.
European bonds slid, led by shorter maturities, as traders bet higher inflation will force the European Central Bank to end its era of negative rates sooner than previously anticipated. German two-year yields, among the most sensitive to changes in the key policy rate, are on course for their first close above zero since 2014.
Confidence in the euro-area economy falls to the weakest level in a year, with inflation expectations jumping to the highest since records began in 1985. Spanish inflation surged at
the fastest rate in almost four decades.
Energy and commodity stocks advanced with oil and natural gas as Nato allies evaluate whether Russia’s promise to scale back military operations marks a turning point in the conflict or simply a tactical shift as attacks were still reported near Kyiv.
Germany triggered an emergency plan to brace for a potential Russian gas cut-off, as President Vladimir Putin steps up demands that the fuel should be paid for in rubles. Russia may expand the list of commodities for which it demands payment in rubles to include grain, oil, metals and others.
The rally in equities globally remains fragile as the war in Ukraine drags on. The Treasury yield curve’s inversion is fanning debate over the risks of a growth downturn as central banks globally begin to withdraw stimulus. Money markets in the US are pricing in two percentage points of additional
interest-rate hikes this year.
“The yield curve inversion needs to be sustained before it’s a predictor of anything,” Mariann Montagne, senior portfolio manager at Gradient Investments , said on Bloomberg Television. “We’ll have volatility both in the stock and the bond markets but we think that progression” on the cease-fire talks will lead to upward earnings
revisions.
A lack of clarity on the cease-fire talks and supply-chain shortages will pose headwinds for the markets, she said.
Consumer sentiment appears resilient, as the latest US confidence data suggest solid job growth has offset Americans’ concerns over accelerating inflation for now. Government data on Friday are expected to show the economy probably added close to a half million jobs in March as unemployment rate falls to 3.7%.
The Stoxx Europe 600 falls 0.6% as of 10:32 am London time and futures on the S&P 500 also drop 0.3%.
While futures on the Nasdaq 100 fall 0.4%, futures on the Dow Jones Industrial Average also slumped by 0.2%. The MSCI Asia Pacific Index rises 1.2% and the MSCI Emerging Markets Index also climbs 1%.
The Bloomberg Dollar Spot Index falls 0.4% and the euro rises 0.6% to $1.1155.
While the Japanese yen climbs 0.8% to 121.95 per dollar, the offshore yuan also rises 0.2% to 6.3596 per dollar. The British pound climbs 0.5% to as much as $1.3152.