Stocks rise, oil price dips on peace talk hopes
On Photo And Shares Call A Closed Market" Below Decline Their A 20% German "bear File Recent Italian Tuesday, Investors Highs
Global stock markets staged a ferocious rebound from the war-induced rout, with European equities notching the biggest rally since the pandemic bottom in March 2020 and US shares jumping the most since November of that year.
The rallies managed to claw back only some of the losses incurred since Russia invaded Ukraine. Oil prices also sank by more than 7%.
German shares vaulted almost 8% to lead strong gains across European stock markets, as investors picked up beaten-down stocks following a rout sparked by fears about the fallout from the Ukraine crisis.
Italian and French shares jumped around 7% each, while the pan-European Stoxx-600 index rallied 4.7% for its best session in two years. The Stoxx-600 broke a four-day losing streak during which it lost about 7%, hit by the threat of a Russian oil imports ban.
On Tuesday, German and Italian shares closed 20% below their recent highs - a decline investors call a "bear market". Hard-hit banks, car makers and travel and leisure stocks rose more than 7% each.
News that Russia and Ukraine expressed willingness to talk helped sentiment and boosted recovery in stocks globally.
"The fact that Western governments seem to be carrying out an economic war against Russia, rather than military conflict, has helped the overall sentiment," said David Madden, market analyst at Equiti Capital.
The German DAX, which has suffered the most among regional indexes due to the companies' exposure to Russian energy supplies, marked its biggest percentage gain since March 2020.
Eurozone banks rallied almost 10%, but still remain down 13% for the year amid uncertainty about the European Central Bank's policy-tightening plans as well as an economic hit from the Ukraine crisis.
The ECB is set to meet, with chief Christine Lagarde likely to prove that a lid can be kept on euro-area inflation, which has already leapt to a bigger-than-expected 5.8% - the highest figure in the bloc's two decades.
On Tuesday, stock markets fell in volatile trade and oil prices jumped to $127 per barrel after the US and Britain moved to ban Russian oil imports, raising fears of global stagflation.
Oil slid over 7% on Wednesday after reports that the United Arab Emirates will call on fellow OPEC members to boost production, potentially easing some of the supply concerns caused by sanctions on Russia after its invasion of Ukraine.
Oil was already pulling back earlier in the session from a rally to peaks not seen in more than a decade, as some investors' fears over a disruption in Russian supplies eased and the International Energy Agency (IEA) said oil reserves could be tapped further.
Brent crude was down $8.91, or 7%, to $119.07 a barrel.
The market had rallied over 30%, with global benchmark Brent hitting a 2008 high at $139 a barrel, since Russia, the world's second-largest crude exporter, invaded Ukraine last month, and the world retaliated with financial sanctions, and this week, bans on oil imports.
The price of Brent crude had gained 28% in the previous six days of trading, and the Relative Strength Index, a momentum indicator, suggested the market was due for a sell-off.