SYDNEY- Most share markets firmed and oil slid on Monday on hopes for progress in Russian-Ukraine peace talks even as fighting continued to rage, while bond markets braced for rate rises in the United States and UK this week.
While Russian missiles hit a large Ukrainian base near the border with Poland on Sunday, both sides gave their most upbeat assessment yet of prospects for talks.
Just the chance of peace saw S&P 500 stock futures add 0.3 percent, while Nasdaq futures rose 0.2 percent. EUROSTOXX 50 futures gained 0.9 percent and FTSE futures 0.4 percent.
Tokyo’s Nikkei rose 0.8 percent, but MSCI’s broadest index of Asia-Pacific shares outside Japan was dragged down 1.1 percent by losses in China.
Chinese blue chips shed 1.1 percent after a jump in coronavirus cases saw the southern city of Shenzen locked down and stoked speculation about more policy easing.
Bonds elsewhere remained under pressure having taken a beating last week as surging commodity prices looked set to boost inflation further, with yields on 10-year Treasuries rising three basis points to 2.03 percent.
Notably, a key measure of US inflation expectations climbed to 3 percent and near record highs.
That merely cemented expectations the Federal Reserve would lift rates by 25 basis points at its policy meeting this week and signal more to come through members’ “dot plot” forecasts.
“The dots will likely be mainly clustered around four or five hikes for 2022, up from three previously, given the stronger pace of inflation since the January FOMC meeting,” said Kevin Cummins, chief US economist at NatWest Markets.
“We suspect we could also get an addendum on how the Fed plans to reduce the size of the balance sheet as early as this week.”
