U.S. Opening Bell: Russian Troop Exit Buoys Europe Stocks, Futures Waver; Gold Up

 | Feb 16, 2022 12:34

  • Crude oil rallies
  • US dollar slides
  • Gold recovers
    • h2 Key Events/h2

    US futures on the Dow Jones, S&P 500, NASDAQ and Russell 2000 slumped for much of the morning on Wednesday, while European shares extended the rebound seen during today's Asia session as Russia announced it is withdrawing some troops from its border with Ukraine.  

    Despite trading slightly lower, US Treasury yields remained above 2%.

    h2 Global Financial Affairs/h2

    European equities on the STOXX 600 climbed for the second day. Traders rotated out of technology into economically sensitive financial and consumer discretionary stocks. Oil companies also retreated.

    After missing the rally yesterday, Asian shares finally benefited from the receding concerns that Russia would invade Ukraine. Japan's Nikkei 225 outperformed with a 2.2% jump, after from a two-day decline due to a rally in technology shares that tracked Wall Street. Also, South Korea's KOSPI jumped about 2% on its best day in two weeks. China's Shanghai Composite added 0.57% after the country's inflation eased. Perhaps, investors are unable to decide whether the improving economy will benefit company profits enough to outweigh any damage from tightening policy which could dent corporate profits.

    US stocks gained during yesterday's New York session, as Treasuries retreated with the greenback in hopes of a diplomatic solution between Russia, the US and NATO. The Russell 2000 jumped 2.79%, outperforming the major averages, which has been rare since Fed Chair Jerome Powell testified to a Senate committee that inflation was likely to persist and that it was time for the Fed to roll back its emergency stimulus to manage rising costs. Conversely, the Dow, whose listed mega cap value stocks profit from a high-inflation environment, underperformed.

    Treasury yields on the 10-year note fluctuated. At the time of writing, bonds had edged lower, extending their decline which pushed yields higher for the third day in a row, for the first time in a month, to their highest level since July 30, 2019. However, yields then retreated to below yesterday's close. Still, rates maintained the gains above the psychological 2% for the second straight day, for now.