Stock futures and oil prices tick lower as investors weigh impact of US-Europe energy talks

  • Futures and oil prices ticked lower Friday as investors weighed up the impact of US-Europe talks.
  • European countries stopped short of sanctioning Russian crude imports, cooling the upward pressure in the oil market.
  • The S&P 500 was on track for its second week of gains, but nonetheless remained around 5% lower for the year.

Stock futures ticked lower on Friday after equity markets rose broadly the previous day, while oil prices slipped as investors gauged the impact of energy talks between the US and European Union.

S&P 500 futures were down 0.11%, Dow Jones futures were 0.09% lower, and Nasdaq 100 futures slipped 0.17%.

In Europe, the continent-wide Stoxx 600 was down 0.09% in early trading. Asian stocks fell overnight, with China’s CSI 300 finishing 1.81% lower as investors worried about possible US sanctions on the country’s companies should Beijing step up its support for Moscow and its war against Ukraine.

Oil prices cooled, with Brent crude 2.09% lower at $116.54 a barrel and WTI crude down 2.31% at $109.93 a barrel.

The step lower in prices came after European Union leaders stopped short of boycotting Russian oil as they met for high level talks in Brussels. Austria, which gets around 70% of its natural gas from Russia, is among the countries warning that such sanctions would damage the wider European economy.

However, the EU and US are reportedly expected to announce a deal for the US to supply more liquefied natural gas to the trading bloc, after President Joe Biden met leaders in the Belgian capital Thursday.

Investors have been left scrambling to work out the economic implications of Russia’s invasion of Ukraine, which began on February 24.

Russia’s status as a major energy provider and the tough Western sanctions imposed on the country have sent energy prices soaring, raising concerns that inflation could spike even further and central banks could be forced to rapidly tighten monetary policy.

“In the near term, we believe that outcomes for markets will focus primarily on the question of when we will reach — or if we have already reached — peak sanctions and oil prices,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in the firm’s monthly newsletter.

US stocks were already having a rough year thanks to expectations that the Fed would have to raise interest rates sharply in 2022, before the Ukraine war injected further


volatility

.

Yet over the last two weeks the S&P 500 has staged something of a comeback, and was set for another week of gains on Friday. The index remained around 5% lower for the year as of Thursday’s close, however, while the Nasdaq 100 was down 9.5% and the Dow Jones was 4.5% lower.

Bond prices have tumbled as central banks have started to raise interest rates and cut back on their support for fixed income markets.

The yield on the key 10-year Treasury note, which moves inversely to the price, was down 2.1 basis points Friday to 2.354%. It still traded near three-year highs, having started the year at around 1.6%.

Investors were weighing up some mixed economic data out Thursday that showed US weekly jobless claims fell to their lowest since 1969 last week, but new orders of durable goods fell 2.2% in February.

“Business activity may soften a little bit more, but not many are expecting complete deterioration in the space,” said Edward Moya, senior market strategist at Oanda.

Read more: The founder of a space investing fund managing $100 million explains why war in Ukraine is transforming the sector — and shares 9 stocks that could soar as the conflict continues

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