(Bloomberg) — Equity-index futures for the US and Europe rose and oil declined on speculation a meeting between US and Russian leaders will increase the chances of ending the war in Ukraine and boost crude supply.
Contracts for European shares gained 0.3%, while those for the S&P 500 Index climbed 0.2%. Oil fell 0.7%, the seventh decline in eight days, while gold also dropped as US President Donald Trump prepares to meet his Russian counterpart Vladimir Putin on Friday. Asian shares edged higher. There’s no cash trading in Treasuries in Asia due to a holiday in Japan.
Asian lithium stocks rose after China’s Contemporary Amperex Technology Co. suspended production at a mine in Jiangxi province for at least three months, a move that may ease oversupply concerns.
“The initial reaction from commodity markets — with both gold and oil prices sliding — underscores investors’ bullish bias for a breakthrough in this week’s US–Russia talks,” said Hebe Chen, an analyst at Vantage Markets in Sydney. “If such a deal is struck, it would not only sustain market optimism, but also mark this week as a historic turning point.”
Financial markets are taking comfort from the prospect of ending the three-year old war in Ukraine after a flurry of discussions during the weekend with European nations seeking to talk to Trump ahead of his meeting in Alaska. Trump had threatened sanctions and also penalties on countries such as India that bought oil from Russia, prompting Putin to have phone calls with Narendra Modi and also other leaders.
Diplomatic negotiations were in full swing during the weekend with National security advisers from Europe, Ukraine and the US meeting in the UK and making significant progress toward the ending of the fighting.
The talks followed an earlier call between Ukraine President Volodymyr Zelenskiy and UK Prime Minister Keir Starmer, and a flurry of diplomacy involving Zelenskiy and other European leaders.
Brent slipped back toward a $66 a barrel, after sliding 4.4% last week, while West Texas Intermediate was above $63. A peace deal with Ukraine could see an end to sanctions on supply from Russia, potentially exacerbating a glut forecast for later in the year.
“Crafting an agreement is going to be extremely difficult,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “Assuming we can eventually resolve this situation, the path for Brent is down below $65 with risks we may see sub-$60” late in the fourth quarter, he said.
Investors are also awaiting key economic data this week and a deadline for the potential extension of US tariffs on Chinese exports. A key focus will be the US inflation report, expected to offer further insight into the Federal Reserve’s interest-rate path amid concern the economy is teetering on the edge of stagflation.
Technology stocks will also be in focus after Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay 15% of their revenues from chip sales to China to the US government as part of a deal with the Trump administration to secure export licenses.
Chinese retail sales and industrial production data due later this week will be parsed after consumer and producer price data at the weekend indicated demand remains fragile. Traders are also waiting for confirmation that the Aug. 12 deadline for talks on US duties on Chinese imports will be extended.
“The market has fully subscribed to the high probability of the tariff truce being rolled over for another 90 days,” said Chris Weston, head of research at Pepperstone Group in Melbourne.
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 10:58 a.m. Tokyo time Australia’s S&P/ASX 200 rose 0.3% Hong Kong’s Hang Seng was little changed The Shanghai Composite rose 0.2% Euro Stoxx 50 futures rose 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1658 The Japanese yen was little changed at 147.62 per dollar The offshore yuan was little changed at 7.1872 per dollar Cryptocurrencies
Bitcoin rose 1.2% to $119,805.08 Ether rose 2.1% to $4,306.47 Bonds
Australia’s 10-year yield was little changed at 4.25% Commodities
West Texas Intermediate crude fell 0.6% to $63.48 a barrel Spot gold fell 0.6% to $3,377.78 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu.
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