US futures surge on Biden-Putin summit

Bloomberg

US equity futures rise and Asian stocks pared losses on Monday as traders evaluated the possibility of a summit on Ukraine between President Joe Biden and his Russian counterpart Vladimir Putin.
Nasdaq 100, S&P 500 and European contracts erased falls to climb about 1%, while an Asia-Pacific equity index came off its lows but stayed in the red. Markets are being whipsawed by Russia’s troop buildup near Ukraine and efforts at diplomacy to bring both sides back from the brink of war.
France said its proposal for a diplomatic meeting was accepted in principle by Biden and Putin. US officials said a summit would occur only if Russia doesn’t invade Ukraine. There was no immediate confirmation from Moscow, which has repeatedly denied that it plans to invade.
Demand for havens eased, taking gold below $1,900 an ounce. Treasury futures slipped — cash Treasuries won’t trade because of a US holiday. Bond yields in Australia and New Zealand stayed lower in a sign of ongoing investor caution.
The dollar dipped and Russia’s ruble rose more than 1%. Other commodity-linked currencies rallied. Oil fluctuated and nickel jumped as investors weigh risks to supplies from the tension in eastern Europe.
Earlier, the US told allies that a Russian invasion of Ukraine could target multiple cities beyond the capital, Kyiv. Biden said he’s convinced Vladimir Putin has decided to move against Ukraine. US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov are due to meet this week.
The Ukraine standoff, along with the worry that tightening Federal Reserve monetary policy could choke growth in the world’s biggest economy, raise the likelihood of more swings in markets in an already volatile year.
“Global data and central banks’ stance on tightening are all taking a back seat to Ukraine, with markets nervously awaiting the next headline,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada. “Thinner liquidity because of the US holiday adds to the anxiety.”
Key Federal Reserve officials at the end of last week backed raising interest rates in March to curb the hottest inflation in 40 years.
Bets on an aggressive, 50 basis-points Fed liftoff next month have diminished. The Fed’s key inflation metric may have accelerated to a fresh four-decade high in January, data this week is expected to show.
In Hong Kong, Chinese technology stocks sank on concerns about more regulatory curbs on the sector.
“Equities are in for a muted year, there are too many uncertainties out there,” Rupal Agarwal, a quantitative strategist at Sanford C Bernstein, said on Bloomberg Television.
She expects markets to remain volatile, and added that “we are moving to a slightly more defensive position — we are clearly in a slowing growth environment where inflationary pressures remain.”
“Headlines will dominate and drive sentiment in broad markets, so expect volatility to remain high,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note. He recommended monitoring the dollar versus the rubble, gold, crude oil and the Nasdaq 100 to help with “making sense of the news flow.”