LONDON – World oil prices dived and European stocks rallied today as apparent progress in peace talks between Moscow and Kyiv sparked hope of an end to the Ukraine conflict.
Oil price fell by more than 5%, with New York’s WTI contract dipping under US$100 per barrel as traders eyed easing Russian oil supply fears amid face-to-face talks in Istanbul aimed at resolving the nearly five-week-old war.
Russia said it would scale down military activity around Kyiv following the “meaningful” talks in Turkey, as Ukraine’s negotiators called for international guarantees for the country’s security.
Ukrainian negotiator David Arakhamia also said there were now “sufficient” conditions for a direct meeting between Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin.
“It’s looking more promising than at any stage since the invasion,” Oanda foreign exchange platform analyst Craig Erlam said.
“Oil prices have fallen sharply on the latest headlines and with talks continuing tonight, there is potential for even more substantial progress to be made,” Erlam said.
“While the removal of sanctions is unlikely as part of the peace process, it could remove further risks to Russian exports.”
Europe’s major stock markets jumped higher, with Frankfurt soaring 3.5%, Paris winning 3.1% and London adding 1.2% in afternoon deals.
Wall Street also opened slightly higher.
The Russian ruble, which tanked after the February 24 invasion, soared by 10% against the dollar.
“It is the first time in this conflict where we have seen any indications for any form of easing of military action from the Russian side,” SEB analyst Bjarne Schieldrop said.
“Until this point, the Russian stand has been very firm of its goals,” Schieldrop said.
“Now for the first time the market is hoping that there might actually be a way forward not being a full destruction and takeover of Ukraine.”
Lockdown to soaring inflation
Asian stock markets had earlier mostly rallied even before the statements from Istanbul, on investor optimism of progress.
However, Shanghai bucked the trend, with stocks falling a day after China’s biggest city and financial hub of 25 million people was placed back in lockdown.
Oil prices had fallen yesterday on concerns that the lockdown would affect demand from China, the world’s top crude consumer.
And the yen firmed versus the dollar, after tumbling the previous day to a 2015 low on loose Japanese monetary policy.
Soaring inflation remains a concern for investors as it raises expectations that the US Federal Reserve will act increasingly more aggressive in tightening monetary policy.
That has sent Treasury yields rocketing, fuelling fears of a sharp economic slowdown.
The yen had slumped after the Bank of Japan said it would buy 10-year government bonds to keep yields from running above its target.
The move reinforced the divergence between the BoJ and Fed as US officials battle to rein in inflation. – AFP, March 29, 2022
