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While the Kremlin complains about "daily" Western predictions of
a Russian invasion of Ukraine, investors for their part have had
no choice but to adjust to each day's unique sabre rattling
noise and assess the probability of a conflict hitting global
financial markets.
Today's news that U.S. President Joe Biden and Russian President
Vladimir Putin have agreed in principle to a summit over Ukraine
has lifted U.S. and European stocks futures and helped Asian
shares pare some losses.
But as much as a swift diplomatic breakthrough to reset Europe's
security framework appears unlikely for now, so does a
full-fledged confrontation between the West and Russia.
What analysts are struggling to do, is pricing how the various
scenarios in between will impact a vast range of asset classes,
from energy to wheat, gold, stocks, bonds and currencies to name
a few.
At the moment, the prospect of de-escalation is moving capital
away from safe havens with the euro jumping 0.4% to $1.1367 and
the dollar retreating 0.36% against its rivals.
This morning also sees oil prices ease on the hope of summit
over Ukraine and news of a possible nuclear deal between Iran
and world powers. Still at about $93 a barrel, oil remains close
to the symbolic $100 bar for the liking of many countries.
A flurry of data from France, Germany and the UK this morning
will shed some light on how much of a toll inflation, tighter
monetary policy and this winter's COVID-19 Omicron wave have
taken on the economic recovery.
And while European companies hoping to fund deals via bond
markets are facing a sudden jump in borrowing costs, business
goes on unabated with French payments company Worldline entering
exclusive talks to sell its TSS terminals business to Apollo
Funds in a deal potentially worth around 2.3 billion euros.
Key developments that should provide more direction to markets
on Monday:
-Arab oil producers say OPEC+ should stick to current output
agreement
- China's new home prices perk up
- Japan's manufacturing activity expanded at the slowest pace in
five months
- Thai economy returns to growth in Q4
- Flash PMIs for France, Germany, EU, UK
(Graphic: Global markets and Ukraine tensions,
https://fingfx.thomsonreuters.com/
gfx/mkt/byprjxggmpe/Global%20markets%20and%20Ukraine%20tensions.PNG)
(Reporting by Julien Ponthus)
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