Stocks on Wall Street rallied and European stocks rebounded from their lowest level in a year as energy prices eased and traders bet on EU leaders taking action to prevent a recession caused by Russia’s invasion of Ukraine.
Renewed risk appetite sent the US S&P 500 index up 2.3%, on track to end a four-game losing streak after ending the previous session at its lowest level since June 2021. The tech-heavy Nasdaq Composite stock index rose nearly 4 percent.
In Europe, the Stoxx 600 gained 3.8% as traders bet on EU policymakers to shield the bloc’s economies from the fallout from the war in Ukraine. The regional gauge had also fallen over the past four sessions as investors gauged the potential wider impact of Western sanctions on Russia. Germany’s Xetra Dax jumped 6.7% after entering a bear market, defined as a 20% decline from a recent high earlier in the week.
Sentiment about the outlook for the eurozone, which faces recession risk due to soaring commodity prices, has changed ahead of a European summit on Thursday, when leaders will discuss a new model for growth and development. investment and reducing dependence on Russian energy.
“We expect Europe to do something huge,” said Gergely Majoros, member of the investment committee at asset manager Carmignac. “We don’t know what is going to be decided,” he added, but the fact that EU leaders are ready to “even talk” about an integrated response is “supportive,” he added. he declares.
Hopes of averting a recession in Europe have “really helped rejuvenate some form of risky environment in global stock markets,” said Aneeka Gupta, research director at exchange-traded fund provider WisdomTree.
The euro, which has steadily weakened against the dollar since Russian President Vladimir Putin sent troops to Ukraine late last month, rose 1.3% to $1.10 . The Stoxx sub-index of European banking stocks rose 7.2%, although it remained around 10% lower for 2022 so far.
Haven’s assets plummeted. The dollar index, which measures the greenback against six other currencies, fell 0.9%. The price of spot gold fell 2.9% to $1,993 an ounce.
Analysts believe the European Central Bank, which holds its monetary policy meeting on Thursday, could delay plans to withdraw emergency stimulus measures put in place to counter the financial shocks caused by the coronavirus two years ago.
But eurozone government bond prices have fallen, reflecting speculation about the bloc’s strongest nations funding additional EU borrowing. The yield on German 10-year government bonds rose 0.09 percentage points to 0.2% as its price fell.
The yield on the 10-year US Treasury note, a barometer of borrowing costs around the world, added 0.05 percentage points to 1.92%.
Elsewhere, energy prices have fallen after sharp increases in recent weeks on fears that sanctions could choke off supply. Futures linked to TTF, Europe’s wholesale gas price, fell more than a quarter to €157 per megawatt hour. A year ago, these contracts traded at around €16.
Brent, the international oil benchmark, fell 5.5% to $121 a barrel. While US President Joe Biden decreed a ban on Russian oil and gas imports on Tuesday, Brent remains about a quarter above its level of February 23, the day before the Russian invasion of its neighbor.
Asian stock markets mostly ended lower on Wednesday. Hong Kong’s Hang Seng Index fell 0.7% and Tokyo’s Nikkei 225 fell 0.3%.
Not covered — Markets, finance and strong opinion
Robert Armstrong dissects the most important market trends and explains how the best minds on Wall Street are reacting to them. Sign up here to receive the newsletter straight to your inbox every weekday