World markets were calm yesterday after two days of wild swings, with the United States and Russia set to hold talks on easing East-West tension in Ukraine.
An index of global equity markets clung to modest gains, currency and bond markets stabilised and oil prices dipped again as the West stepped up efforts to persuade Moscow to pull its forces back in Crimea and avert the risk of war. Russian President Vladimir Putin said on Tuesday that military force would be used only as a last resort.
Investors, while awaiting developments between Russia and the West, turned their focus to what the European Central Bank might do today to support the region’s fragile economy and the US government’s latest job snapshot tomorrow.
“The market is generally sideways until Friday’s jobs report,” said David Molnar, managing director at HighTower San Diego
Wall Street shares were little changed, with the Standard & Poor’s 500 index hovering near its record high close set on Tuesday. Softer-than-expected jobs data from US payroll processor ADP nicked optimism over Friday’s US non-farm payrolls figures, while a separate private gauge of US service sector activity fell to its weakest level in four years in February, though it still pointed to expansion in that sector. Investors seemed to chalk up the weakness overall to the weather.
In early afternoon trading, the Dow Jones industrial average was down 30.99 points, or 0.19 per cent, at 16,364.89. The Standard & Poor’s 500 Index was up 1.06 points, or 0.06 per cent, at 1,874.97. The Nasdaq Composite Index was up 8.27 points, or 0.19 per cent, at 4,360.25.
A measure of European shares, which surged more than two per cent on Tuesday to spur a global rebound, ended down 0.06 per cent at 1,343.99.
In Asia, Tokyo’s Nikkei climbed 1.2 per cent.
Russian stocks and the rouble fought off early weakness as investors decided Moscow was dialing down the intensity of its rhetoric over Ukraine.
Putin said he did not want political tension to detract from economic cooperation with Russia’s “traditional partners.” The calmer geopolitical view kept the yen under pressure after a heavy reversal on Tuesday. The dollar was last buying 102.37 yen, moving away from a one-month low of 101.20 hit on Monday.
The relative calm in Crimea, where Russia intervened this past weekend, allowed attention in Europe to drift back toward today’s meeting of European central bankers.
The euro edged down 0.1 per cent to $1.3731 overnight and held firm versus the yen at 140.53 yen. The German bond market’s general safe-haven appeal waned, sending 10-year Bund yields up to 1.61 per cent.
ECB policymakers remain under pressure either to cut interest rates again or use additional unconventional measures to fend off the threat of ultra-low inflation turning into something more damaging.
Analysts at Citi said in a note that their base-case expectation was that the bank would cut rates by 15 basis points to 0.10 per cent. But many others think it will hold off for now.