Notable gains on Wall Street after Monday’s slightly bearish close, due to the withdrawal of Russian troops in Ukraine, which has been very well received by the market; and while investors continue to analyze the messages sent by the Federal Reserve (Fed) to contain inflation.
On the geopolitical front, the news that has animated the world stock markets is that the spokesman for the Russian Defense Ministry, Igor Konashenkov, has said that “the detachments of the South and West military districts that fulfilled their missions are preparing this Tuesday to return to their bases on trains and troop transfer vehicles.”
For its part, the US has closed its embassy in Kiev and has warned of “a dramatic acceleration in the deployment of Russian troops“, as confirmed by the American Secretary of State, Anthony Blinken.
Meanwhile, German Chancellor Olaf Scholtz met with Vladimir Putin in Moscow on Tuesday in what has been seen as the last diplomatic contact before a military move takes place, which according to the US can start this Wednesday. As published by ‘Infobae’, the withdrawal of Russian troops “is a good sign”, but he pointed out that “there should be more”. Scholtz has advocated a continuation of the dialogue that avoids armed conflict. “I expressly agree that diplomatic options are far from exhausted”, he has said.
After his meeting with the Ukrainian president, Volodimir Zelensky, Scholtz asked the Kremlin for “clear de-escalation gestures” and pointed out that the movements and deployments of Russian troops on the border with Ukraine “are not justified“. For his part, Zelensky reiterated that his country wants to strengthen its alliance with Western countries and will seek to enter the European Union, while not ruling out joining NATO.
In this context, short-term uncertainty is at its maximum, so an increase in volatility is foreseeable in the coming days. “We continue to be stuck in a tense wait, this week much more tense. Any Russian intervention in Ukraine would lead us to execute the so-called quantitative ‘Phase 2’ of our reaction strategy, which consists of reducing the exposure to exchanges by 10% in all risk profiles“, they explain from Bankinter.
RATE RISES BY THE FED
The other major focus of the market is the Fed’s monetary policy. The president of the St. Louis Fed, James Bullard, reiterated on Tuesday that the central bank must raise rates by 100 basis points by July in order to control inflation. .
“I think we have to anticipate the withdrawal of stimuli more. Inflation has surprised us on the rise and is at very high levels. Our credibility is at stake and we have to react to the data”, although “in an organized way and without disturbing the markets,” he said.
On the economic scene, the New York Empire State Manufacturing Index and the Producer Price Index for January have been released. In the first, the figure of 3.1 has been far from the 12.15 estimated by the consensus. On the other hand, the Producer Price Index stood at 9.7%, higher than the estimated 9.1%, but lower than the 9.8% reported the previous month.
In other markets, West Texas oil falls 3.8% to $91.80; while the euro appreciates 0.5% and changes to $1.1363. In addition, the return on the 10-year US bond rose to 2.041% and an ounce of gold fell 0.8% ($1,853). Lastly, bitcoin rebounded 4% ($43,970).
