Global equity markets edged higher yesterday after President Vladimir Putin of Russia sounded a conciliatory note over the crisis in Ukraine, while bond yields in Europe fell to record lows as the eurozone’s recovery stalled in the second quarter.
Putin told Russian ministers and members of Parliament in Crimea that Russia would stand up for itself but not at the cost of confrontation with the outside world, easing off months of tough rhetoric over Ukraine.
Stocks on Wall Street rose, following gains in Europe, where equity markets have tumbled in past weeks on fears of an escalation of tensions between the West and Moscow over Ukraine.
The pan-European FTSEurofirst 300 index rose 0.28 per cent to close at 1,329.14, and MSCI’s all-country world index rose 0.3 per cent.
On Wall Street, the Dow Jones industrial average rose 55.26 points, or 0.33 per cent, at 16,707.06. The Standard & Poor’s 500 Index was up 7.98 points, or 0.41 per cent, at 1,954.70. The Nasdaq Composite Index was up 15.82 points, or 0.36 per cent, at 4,449.94.
Bond yields dropped to record lows across the eurozone, and the euro hovered near its weakest in nine months after Germany reported its economy shrank in the second quarter, fueling expectations of more European Central Bank stimulus.
German 10-year bond yields briefly traded below one per cent for the first time, falling to 0.988 per cent, according to traders who contribute data to trading platforms. Spanish and French bond yields also plumbed record lows.
Benchmark 10-year US Treasuries rose 5/32 in price, pushing the yield down to 2.4104 per cent.
A surprise 0.2 per cent contraction in economic output in Germany, the eurozone’s growth engine, and stagnation in France halted the currency bloc’s recovery.
Analysts polled by Reuters had expected the eurozone to eke out a 0.1 per cent quarterly expansion.
Persistent fears about Russia’s aid convoy to eastern Ukraine, which Kiev and the West reckon could be a pretext for an invasion, also helped intensify demand for lower-risk US and German government debt.
The euro rose from nine-month lows against the dollar, trading 0.02 per cent stronger at $1.3367. The Japanese yen traded just above break-even at 102.49.
Brent oil fell more than $2 to near $102 a barrel as higher US jobless claims and Germany’s economic contraction highlighted weak demand, while supplies are ample despite conflicts in Iraq and Libya.
Brent crude for delivery in September was down $2.11 at $102.17.
US crude for September delivery was down $1.63 cents at $95.96 a barrel.