SYDNEY- Asian share markets pared sharp early losses on Monday as a glimmer of hope emerged for a diplomatic solution to the Russian-Ukraine standoff, though there remained plenty of devil in the detail.
Wall St futures rallied on news US President Joe Biden and Russian President Vladimir Putin have agreed in principle to hold a summit on the Ukraine crisis.
One condition for the summit was that Putin did not invade Ukraine, a turn of events that still seemed possible given Russia extended military drills in Belarus and continued to build up troops on the Ukraine border.
Just the chance of a peaceful solution was enough for S&P 500 stock futures to reverse out of early losses to trade 0.4 percent higher. Nasdaq futures edged up 0.2 percent, having been down more than 1 percent earlier. US markets are on holiday on Monday but futures still traded.
Likewise, EUROSTOXX 50 futures erased an early drop to rise 0.1 percent, and FTSE futures swung back to flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan pared their losses to be down 0.4 percent, while Japan’s Nikkei halved its drop to be down 0.9 percent.
Also troubling markets has been the prospect of an aggressive tightening by the US Federal Reserve as inflation runs rampant. The Fed’s favoured measure of core inflation is due out later this week and is forecast to show an annual rise of 5.1 percent – the fastest pace since the early 1980s.
“January inflation readings have surprised materially to the upside,” noted JPMorgan chief economist Bruce Kasman.
“We now look for the Fed to hike 25bp (basis points) at each of the next nine meetings, with the policy rate approaching a neutral stance by early next year.”
