Optimism About Ukraine Peace Deal May Generate Early Buying Interest

The major U.S. index futures are currently pointing to a modestly higher open on Thursday, with stocks likely to extend the recovery from the sell-off seen early in the previous session.

The markets may benefit from optimism about a possible peace deal between Russia and Ukraine following comments from President Donald Trump.

Trump said he had a “lengthy and highly productive phone call” with Russian President Vladimir Putin and called Ukraine’s NATO membership not “practical,” raising expectations for an end to the war in Ukraine.

Meanwhile, traders have seemingly shrugged off another hotter than expected inflation reading, as the Labor Department released a report showing producer prices rose by slightly more than expected in January.

The Labor Department said its producer price index for final demand rose by 0.4 percent in January after climbing by an upwardly revised 0.5 percent in December.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

Meanwhile, the report said the annual rate of producer price growth in January was unchanged from an upwardly revised 3.5 percent in December.

The annual rate of producer price growth was expected to slow to 3.2 percent from the 3.3 percent originally reported for the previous month.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits fell by slightly more than expected in the week ended February 8th.

After moving sharply lower early in the session, stocks showed a notable recovery attempt over the course of the trading day on Wednesday. The major averages climbed well off their worst levels of the day, with the tech-heavy Nasdaq reaching positive territory.

The Nasdaq inched up 6.09 points or less than a tenth of a percent to 19,649.95 after tumbling by as much as 1.2 percent, but the Dow and the S&P 500 ended the day in the red.

The Dow slid 225.09 points or 0.5 percent to 44,368.56, while the S&P 500 fell 16.53 points or 0.3 percent to 6,051.97.

The early sell-off on Wall Street came following the release of a closely watched Labor Department report showing consumer prices in the U.S. increased by more than expected in the month of January.

The Labor Department said its consumer price index advanced by 0.5 percent in January after climbing by 0.4 percent in December. Economists had expected consumer prices to rise by 0.3 percent.

The report also said the annual rate of consumer price growth accelerated to 3.0 percent in January from 2.9 percent in December, while economists had expected the pace of growth to remain unchanged.

The bigger than expected monthly increase by consumer prices partly reflected a continued surge by energy prices, which shot up by 1.1 percent in January after spiking by 2.4 percent in December.

Excluding the jump by energy prices as well as a 0.4 percent increase by food prices, core consumer prices rose by 0.4 percent in January after inching up by 0.2 percent in December. Core prices were expected to increase by 0.3 percent.

The annual rate of core consumer price growth also ticked up to 3.3 percent in January from 3.2 percent in December. Economists had expected the pace of growth to slow to 3.1 percent.

The hotter than expected inflation data increased speculation the Federal Reserve will leave interest rates on hold for a prolonged period.

Fed Chair Jerome Powell noted during his congressional testimony on Tuesday that the central bank can “maintain policy restraint for longer” if inflation does not continue to move sustainably toward 2 percent.

“Today’s data reaffirms Powell’s decision to put rate cuts on the back burner for an extended period of time,” said Charlie Ripley, Senior Investment Strategist for Allianz Investment Management.

He added, “Overall, today’s inflation data should force market participants to re-think the Fed’s ability to cut rates this year, especially considering the rise in prices is likely unrelated to any tariff activity from the White House.”

The early selling pressure was partly offset by a report from Reuters indicating President Donald Trump is considering exemptions to the reciprocal tariffs he may announce as early as Thursday.

House Speaker Mike Johnson told Reuters the exemptions could include the automobile and pharmaceutical industries but admitted he is “not certain.”

Oil producer stocks moved sharply lower over the course of the session, dragging the NYSE Arca Oil Index down by 2.9 percent.

The sell-off by oil stocks came as the price of crude oil plunged following the release of a report showing a bigger than expected weekly increase by U.S. crude oil inventories.

Significant weakness also remained visible among interest rate-sensitive housing stocks, as reflected by the 1.7 percent loss posted by the Philadelphia Housing Sector Index.

Natural gas, steel and commercial real estate stocks also saw notable weakness, while gold stocks showed a strong move to the upside despite a modest decrease by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are slumping $0.88 to $70.49 a barrel after tumbling $1.95 to $71.37 a barrel on Wednesday. Meanwhile, after slipping $3.90 to $2,928.70 an ounce in the previous session, gold futures are climbing $13.50 to $2,942.20 an ounce.

On the currency front, the U.S. dollar is trading at 153.58 yen versus the 154.42 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0394 compared to yesterday’s $1.0383.

Asia

Asian stocks advanced on Thursday after U.S. President Donald Trump said that he had a “lengthy and highly productive phone call” with President Vladimir Putin of Russia and that Ukraine’s NATO membership is not “practical,” raising expectations for an end to the war in Ukraine.

Trump expects to meet Putin in Saudi Arabia for Ukraine peace talks, sparking concerns about Ukraine’s exclusion.

The dollar stayed under pressure in Asian trading as a bond market sell-off paused and talks between the U.S and Russia helped improve overall risk sentiment in financial markets.

Gold held near record highs despite the latest U.S. CPI data reinforcing market expectations that the Federal Reserve will maintain its aggressive monetary policy.

Oil prices were down around 1 percent in Asian trading, thanks to potential Ukraine-Russia talks, rising U.S. crude stockpiles and hawkish remarks from Fed Chair Jerome Powell.

China’s Shanghai Composite Index dropped 0.4 percent to 3,332.48 after a choppy session. Hong Kong’s Hang Seng Index dipped 0.2 percent to 21,814.37, giving up early gains.

Baidu surged 5.7 percent after announcing it plans to make its popular ChatGPT-style artificial intelligence chatbot available for free starting April 1.

Alibaba shares rallied 2.6 percent as chairman Joe Tsai confirmed reports that the Chinese tech company will partner with Apple on AI for iPhones sold in the China market.

Japanese markets rallied on the back of a weaker yen. The Nikkei 225 Index jumped 1.3 percent to 39,461.47, while the broader Topix Index settled 1.2 percent higher at 2,765.59.

Heavyweight SoftBank fell 3.6 percent after posting a surprise quarterly loss. Honda Motor climbed 2.1 percent, while Nissan edged down slightly after they decided to terminate talks over integrating their businesses.

Seoul stocks hit a three-month high, led by tech and auto shares on growing hopes for an exemption from U.S. tariffs. The Kospi closed 1.4 percent higher at 2,583.17, extending gains for a third straight session and reaching its highest level since November 4, 2024.

Australian markets pared early gain to end on a flat note. While higher iron ore prices lifted mining stocks, financials dipped after strong gains in the previous session. Treasury Wine Estates slumped 5.7 percent after a profit warning.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index ended little changed at 12,905.98.

Europe

European stocks are broadly higher on Thursday amid improving prospects for a peace settlement in Russia-Ukraine war.

U.K. stocks have underperformed, with the FTSE 100 moving lower on the back of disappointing earnings updates, ex-dividend adjustments and a stronger pound on upbeat GDP data.

The U.K. economy unexpectedly expanded in the fourth quarter, underpinned by services and construction output, the Office for National Statistics said.

Gross domestic product grew 0.1 percent from the third quarter, confounding expectations for a contraction of 0.1 percent. This follows nil growth in the third quarter.

On a yearly basis, the fourth quarter growth in GDP came in at 1.4 percent compared to 1.0 percent in the third quarter.

Elsewhere, German consumer price inflation moderated as initially estimated at the start of the year, the latest data from the statistical office Destatis showed.

The consumer price index rose 2.3 percent year-on-year in January following a 2.6 percent increase in December, which was the highest inflation rate in eleven months. That was in line with the flash data published on January 31.

Inflation based on the harmonized index of consumer prices was unchanged at 2.8 percent in January, as estimated.

The pan-European STOXX 600 Index is up by 0.8 percent after inching up 0.1 percent on Wednesday.

The German DAX Index is up by 1.7 percent and France’s CAC 40 Index is up by 1.4 percent, although the U.K.’s FTSE 100 Index has bucked the uptrend and fallen by 0.5 percent.

French telecom operator Orange SA has shown a strong move to the upside after meeting its targets for 2024.

Ray-Ban maker EssilorLuxottica has also moved notably higher after reporting its operating profit rose 9.4 percent last year.

German online takeaway food company Delivery Hero SE has also surged after reporting fourth quarter growth above estimates.

Thyssenkrupp AG has also soared. The German industrial conglomerate raised its outlook for free cash flow, citing 1 billion euros ($1.04 billion) in advance payments for a major submarine order from the German military.

Siemens AG has also spiked as the technology group reported better-than-expected quarterly results and confirmed 2025 guidance of organic growth.

Swiss food giant Nestle has also moved sharply higher after sales growth exceeded expectations in the final quarter of last year.

On the other hand, shares of British American Tobacco have plummeted after the company reported a mixed set of results.

British bank Barclays has also plunged despite posting strong results for the year ending December 31, 2024 and launching a £1 billion share buyback.

U.S. Economic News

Following yesterday’s hotter than expected consumer price inflation data, the Labor Department released a report on Thursday showing U.S. producer prices also increased by slightly more than anticipated in the month of January.

The Labor Department said its producer price index for final demand rose by 0.4 percent in January after climbing by an upwardly revised 0.5 percent in December.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

Meanwhile, the report said the annual rate of producer price growth in January was unchanged from an upwardly revised 3.5 percent in December.

The annual rate of producer price growth was expected to slow to 3.2 percent from the 3.3 percent originally reported for the previous month.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits fell by slightly more than expected in the week ended February 8th.

The report said initial jobless claims dipped to 213,000, a decrease of 7,000 from the previous week’s revised level of 220,000.

Economists had expected jobless claims to slip to 215,000 from the 219,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also edged down to 216,000, a decrease of 1,000 from the previous week’s revised average of 217,000.

At 11 am ET, the Treasury Department is scheduled to announce the details of this month’s auction of twenty-year bonds.

The Treasury Department is also due to announce the results of this month’s auction of $25 billion worth of thirty-year bonds at 1 pm ET.