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Stocks cheer for cooling geopolitical tension, oil slides, gold retreats

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Asia markets are set to open higher following a strong rebound in US stocks overnight amid cooling geopolitical tensions. The Russian Defence Ministry said it started returning some troops to the deployment base. ASX 200 futures are up 1%, pointing to a higher open on the S&P/ASX 200.

US stocks

The three major indices all finished higher, led by tech shares. The tech-heavy Nasdaq jumped 2.5%, the Dow Jones Industrial Average was up 1.2%, and the S&P 500 rose 1.6%.

Technology and consumer discretionary stocks led the broader market gains, with all of the Mega Cap companies closing higher. Tesla shares gained more than 4%. Nvidia shares jumped 9%, and Advanced Micro Devices was up near 6%. AMD finalized the purchase of Xilinx Inc. valued at $US50 billion on Monday.

The US January Producer Price Index recorded at 1% MoM, more than economists forecasted, the fastest monthly increase since May 2021. But the yearly increase slowed from 9.8% to 9.7%, indicating price pressure might be moderating. The January Fed meeting minutes to be released tomorrow will be closely watched by investors for clues of the rate-hike speed.

Treasuries

The 10-year US Treasury yield spiked to 2.04% after the higher-than-expected PPI data was released. The bond markets took a breather amid cooling Ukraine tension. The 2-year Treasury yield steadied at 1.575%.

Commodities

Safe haven asset gold retreated from a 3-month high, with the geopolitical tension cooling. The precious metal was down $US15, to $US1,874.5 per ounce.

The soaring crude oil price also pulled back from 8-year highs. WTI futures fell 3.7%, to $US91.92.

Currencies

USD weakened as risk-off sentiment cooled. The US dollar index fell 0.38%, to 95.987. Euro was up 0.44% against the greenback, with the geopolitical tension relieved in the region. The commodity currencies, including AUD and NZD, were both up 0.3% against the US dollar, but the Canadian dollar was flat amid falling oil prices.

Cryptocurrencies

The crypto markets rebounded sharply on Wednesday as risk-on sentiment returned. Bitcoin was up 4.42%, to above $US44,000. Ethereum jumped 7.5%, to above $US3,100. The two leading digital tokens are up by 34% and 44% from their lows in January at $US32,917 and $US2,159 respectively.  


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