Global stocks firm, bonds gain respite from rout

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  • Stocks rebound, bond yields near highs
  • US stock futures on the rise
  • Upbeat earnings support sentiment

LONDON, Feb 9 (Reuters) – Global equity markets rallied on Wednesday, putting aside concerns over rising interest rates for the time being to take comfort in positive headlines out of Ukraine and upbeat earnings .

The pan-European STOXX 600 (.STOXX) climbed almost 1.5%. This followed a strong session in Asia, where MSCI’s broadest Asia Pacific ex-Japan equity index (.MIAPJ0000PUS) rose 1.5% to a two-week high and the blue-chip Nikkei rose. closed up 1.08% (.N225).

US stock futures pointed to a strong open for Wall Street, where stocks ended sharply higher on Tuesday.

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Headlines in recent days suggest tensions between the West and Russia over Ukraine may be easing and a series of upbeat earnings looks to have bolstered sentiment towards risky assets, and a sell-off on bond markets eased.

French President Emmanuel Macron, who met Russian President Vladimir Putin on Monday, said on Tuesday he believed steps could be taken to defuse the crisis in which Russia has massed troops near Ukraine, but said that she was not planning an attack. Read more

On the earnings front, French fund manager Amundi (AMUN.PA) posted a sharp rise in profits on Wednesday, British drugmaker GSK’s (GSK.L) quarterly results beat forecasts, while the bank Dutch company ABN Amro (ABNd.AS) announced a rise in profits. -higher than expected net profit of 552 million euros for the fourth quarter.

“The past few days have seen positive headlines on Russia/Ukraine with negotiations between Macron and Putin and reports of German efforts to de-escalate the crisis,” said Mohit Kumar, managing director, interest rate strategy, Jefferies.

“But we remain of the view that a bigger concern for risky assets is the removal of central bank accommodative measures, as markets have become accustomed to ample liquidity and low rates for a long time.”

Major central banks have become more hawkish in the face of stiffer-than-expected inflation.

Barring any big surprises, Thursday’s U.S. consumer price index should cement expectations that the Federal Reserve will raise interest rates next month, with a solid print providing additional support for those forecasting a hike. larger by 50 basis points.

The yield on Japan’s 10-year government bonds hit 0.215%, its highest level since January 2016.

But after a sell-off, the broader bond markets appeared to be gaining respite.

At the start of trade in London, the 10-year US Treasury yield fell around 3 basis points to 1.92%, but not far from the highest levels since the end of 2019 on Tuesday.

The German 10-year Bund yield was down 5 basis points on the day at 0.21%.

Benchmark bond yields on the rise

The European Central Bank’s hawkish stance last week left Bund yields up 20 basis points in the month so far and on track for their biggest monthly rise in a year.

Rising borrowing costs and signs of rate normalization in Europe have boosted bank stocks – a sub-index of European bank stocks (.SX7E) is at its highest since July 2018, up nearly 4% since last Thursday’s ECB meeting.

Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas, said market volatility persisted as investors tried to determine how often, how far and how quickly central banks would raise interest rates.

“The main theme of the market is central bank monetary policy,” he said. “I think the volatilities will continue and perhaps increase…but longer term, corporate balance sheets, particularly in emerging Asian markets, look much better than they did before.”

Currency markets were relatively calm, with the dollar index, which measures the greenback against six peers, little changed at 95.556.

Oil prices rose slightly, recovering some ground after a sharp decline on Tuesday when fears of a possible increase in supplies from Iran weighed on the market.

Brent crude futures rose 0.2% to $90.97 a barrel, while U.S. crude was at $89.52 a barrel, up 0.2%. WHERE/

Spot gold was flat at $1,826.5 an ounce.

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Reporting by Dhara Ranasinghe; Additional reporting by Xie Yu and Alun John in HONG KONG; Edited by Timothy Heritage

Our standards: The Thomson Reuters Trust Principles.

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