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Oil prices fell, while stocks were poised to open higher, extending a volatile spell as investors track the economic fallout of the war in Ukraine.
Brent-crude futures declined 1.8%, paring gains from earlier in the session. The U.S. has banned imports of Russian oil and gas, while Russian President Vladimir Putin has issued a decree banning exports of unspecified commodities and raw materials.
Ukraine's president, Volodymr Zelensky told ABC News that "I have cooled down regarding the question" of NATO membership and said he was open to dialogue on the fate of Eastern Ukraine republics, Donetsk and Lugansky, that Russia recognizes as independent.
Russia's and Ukraine's foreign ministers are due to meet Thursday in Turkey.
"While the contours of the end of this war are becoming visible, that doesn't necessarily mean the fighting will stop any time soon," said Arne Petimezas, senior analyst at AFS Group.
A surge in oil prices, given new momentum by the U.S. embargo on Russian energy, has raised concerns among money managers that sustained inflation and lower economic growth could collide.
Major central banks were on track to begin tightening monetary policy before Russia invaded Ukraine. The European Central Bank is meeting this week. Federal Reserve Chairman Jerome Powell said last week that he planned to propose a quarter percentage-point rate increase at the central bank's meeting this month.
Russia's stock market remained closed, though trading on its currency market was open. Money markets, which trade in short-term loans between banks and other financial institutions, and the repo market, were also open.
Forex:
The safe-haven dollar fell in early European action, while the euro rebounded after recent heavy losses as Europe refrained from joining the U.S. and the U.K. in imposing sanctions on imports of Russian energy, though the relief for the euro could be short-lived, said MUFG.
Europe could yet be pressured to follow suit, while Russia may also curtail gas flows into Europe, and "the risk of an energy-shock-fuelled recession remains high," said MUFG, adding that energy disruptions in Europe now seem a near certainty.
In the cryptocurrency market, bitcoin jumped, rising about 9.2% from its 5 p.m. ET closing price Tuesday to trade around $42,094.
Bonds:
The yield on 10-year Treasury notes edged up to 1.903% from 1.870% Tuesday.
Eurozone government bonds appeared to stabilize after Tuesday's major selloff, even as inflation risks continue to prevail and signs of ever closer EU integration emerge, said analysts.
The prospect of EU support to the defense and energy sectors, potentially in the form of joint EU bonds, caused government bonds to sell off on Tuesday, even as there doesn't seem to be concrete plans on any such bond issuance at this stage.
Mizuho analysts said that while extra EU issuance is unlikely to hit the market anytime soon, "the market will still account for fiscal spending in the eurozone of some description."
Read: Fitch slashes Russian debt further into junk, says 'default imminent'
Commodities:
Oil held solid gains in Europe, with Brent above $130 a barrel, as Russian crude exports are sidelined, although Commonwealth Bank Australia said U.S. and U.K. plans to ban Russian imports might not have a huge effect on global oil availability.
So-called "self-sanctioning" from companies cutting their ties to Russia voluntarily have already halted around 70% of Russia's oil exports, CBA said. "It's plausible that the U.S. and U.K. import ban may not change current market dynamics much in the physical market."
Much more important would be whether the EU takes similar steps as the bloc accounts for more than half of Russia's crude exports, CBA added.
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Gold is poised to rally further on strong safe-haven inflows, UOB said. Inflows to gold ETFs have returned recently, with total global tonnage in gold ETFs rising above 100 million ounces around mid-February and at 102.8 million ounces in early March, UOB said.
These inflows alongside mounting stagflation fears have taken over as dominant drivers for the price of gold, UOB added. The Singapore bank now forecasts gold prices at $2,100/oz for 2Q, $2,150/oz for 3Q and $2,200/oz for 4Q, compared with its $1,900/oz-$2,000/oz range projected across this year previously.
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Base metal prices could rise amid a worsening European supply outlook and shipping disruptions, Goldman Sachs said.
"With shipping disrupted from Black Sea ports and all European smelting now uneconomical at current energy prices, we would expect to see higher prices across the metals complex...in the near term," the investment bank said.
Goldman forecasts copper will reach $12,000 a ton and for both zinc and aluminum to hit $5,000 a ton should these disruptions intensify.
Read: Following wild session, nickel trading won't resume before Friday, says London Metals Exchange
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House Lawmakers Include $13.6 Billion for Ukraine in Omnibus Spending Bill
WASHINGTON-Congressional leaders released a sweeping bill to fund the federal government for the 2022 fiscal year and send further military and humanitarian assistance to Ukraine, as well as appropriate money for the continuing pandemic response.
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Job Openings Stay Elevated as Labor Market Emerges From Omicron Disruptions
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Mainstream Hedge Funds Pour Billions of Dollars Into Crypto
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03-09-22 0551ET
