U.S. equity futures were flat heading into overnight trading Wednesday after stocks ended a losing streak to log their best session in two years.
All three main benchmarks closed higher for the first time in four days and commodity prices retreated from a recent spike as investors looked optimistically toward a possible de-escalation of Russia’s war in Ukraine.
Contracts on Wall Street’s key hovered near the flatline in post-market trading after the S&P 500 notched its best day since June 2020 and the Nasdaq Composite saw its biggest single-session gain in a year.
The Dow Jones Industrial Average closed 2% higher. Earlier this week, the Dow and Nasdaq entered a correction and bear market, respectively.
“Markets were priced like the Straits of Hormuz were blockaded, and that was just not reasonable, and it's not like the Middle East suddenly was offline,” Harris Financial Group managing partner Jamie Cox said in a note.
“Markets often have ‘hair on fire’ overreactions to world events which unlock tremendous value for those who pay attention to the price dislocations.”
Energy prices fell sharply Wednesday after soaring to 14-year highs this week following reports Ukrainian president Volodymyr Zelensky was open to discussing a diplomatic solution with Russia.
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WTI crude oil plunged to around $110 per barrel, while Brent crude fell to trade near $112 per barrel. The S&P 500 Energy sector snapped an 8-day winning streak. Even as oil prices abated, U.S. gas prices notched a fresh high.
Russia's foreign minister Sergei Lavrov is also expected to meet in Turkey Thursday with his Ukrainian counterpart Dmytro Kuleba.
“Equity markets have a bid today as the markets are clinging to the slightest glimmer of hope of a possible step towards de-escalation when the Ukrainian and Russian finance ministers meet in Turkey tomorrow,”
Commonwealth Financial Network global investment strategist Anu Gaggar said in a note. “Markets may also be taking a break from a downtrend and seeing some consolidation due to oversold conditions.”
U.S. traders will continue to monitor geopolitical conditions Thursday but temporarily shift their attention to the Bureau of Labor Statistics’ Consumer Price Index (CPI) for the latest gauge on inflation.
Consensus economists polled by Bloomberg are looking for the CPI to jump by 7.9% in February compared to last year. The figure would mark the fastest annual jump since 1982 and surpass January's current 40-year high rate of 7.5%.
“Tomorrow’s CPI print will shed light on the impact of higher energy prices on inflation and will only reinforce the robust Fed tightening cycle,” Gaggar said.
“Even if a deal [between Russia and Ukraine] is magically achieved tomorrow, it is unlikely for the sanctions to be lifted in a hurry, which means that prices of fossil fuels could remain higher for longer. Source: MSN