S&P 500 Futures, yields retreat as Ukraine woes jostle inflation fears

  • Market sentiment dwindles amid mixed concerns over Russia-Ukraine crisis, inflation jitters.
  • S&P 500 Futures, US 10-year Treasury yields consolidate recent gains.
  • Japan’s Nikkei 225 print mild gains despite fears of BOJ intervention.
  • US hints at further challenges for Russia, Fedspeak keeps favoring aggressive rate hikes.

Market sentiment remains sour during Friday’s Asian session as geopolitical headlines challenge the bulls amid an absence of major data/events.

That said, S&P 500 Futures drop 0.15% intraday to 4,506, consolidating the heaviest daily gains in a week, whereas the US 10-year Treasury yields retreat from the previous daily close around 2.37% at the latest. It’s worth noting, however, that Japan’s Nikkei 225 and Australia’s ASX 200 have so far managed to push back the bears with mild intraday gains by the press time.

US President Joe Biden pushed the European leader, the Group of Seven (G7) and North Atlantic Treaty Organization (NATO) members to announce more sanctions on Russia for its invasion of Ukraine. While his NATO friends could arrange battles guards for four of the Ukrainian cities and criticized Beijing’s ties with Moscow, the rest mostly refrained from major punitive actions against Russia.

Recently, a Senior US Official was quoted saying, per Reuters, “Russia will emerge from Ukraine conflict weaker militarily and politically.” On the same line was a news piece from Reuters suggesting a lack of accuracy in Russia’s precision missiles and a likely dearth of the same in recent days. Furthermore, Australia and Japan also joined the West in sanctioning Russia.

Elsewhere, Japanese Government Bond (JGB) yield reach the levels that pushed the Bank of Japan (BOJ) towards a market intervention in 2015 while North Korea’s missile launch add to the risk-off mood.

That said, the risk-aversion wave favors the gold prices but the US Dollar Index (DXY) retreats despite the recent hawkish comments from the Fed policymakers. It should be noted that WTI crude oil remains pressured amid indecision over the Ukraine-Russia crisis and the US readiness to help European when it comes to energy usage, to overcome the supply crunch due to political jitters with Moscow.

Moving on, a light calendar may allow markets to consolidate the latest moves but covid headlines from China and Europe, as well as Fedspeak, will keep the traders busy.

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