European equities were on their way to their best week since November 2020 on Friday, although analysts warned of further volatility ahead driven by the war in Ukraine.
The Stoxx 600 stock index traded largely flat in early trading, at a fraction below its closing level on February 23, the day before Russia launched its invasion.
The regional meter remains nearly 8 percent lower for the year, but had increased along with the global stock markets Earlier this week on proposals, Russia and Ukraine had made progress on a preliminary peace plan, and signs that Beijing would introduce economic stimulus measures.
Germany’s Xetra Dax fell 0.5 percent and London’s FTSE 100 lost 0.1 percent after the prospect of increased tensions between Washington and Beijing drove a mixed session in Asia.
Friday’s initiative came as US President Joe Biden ready to warn his Chinese counterpart, Xi Jinping, in retaliation if Beijing actively supported Russia in Ukraine. US Secretary of State Antony Blinken also warned there were no signs President Vladimir Putin was “ready to stop” Russia’s invasion of its neighbor.
“The actions that we see Russia carry out every single day, virtually every minute of every day, are in stark contrast to any serious diplomatic effort to end the war,” Blinken said on Thursday.
Hong Kong’s benchmark Hang Seng index fell 0.4 percent, and the CSI 300 index for Shanghai and Shenzhen-listed stocks rose 0.7 percent, recovering from sharp declines earlier in the session.
Mary Nicola, multi-asset portfolio manager at PineBridge Investments, said it was uncertain whether the gains would hold. “The comments from China had been supportive of the market,” she said. “But the only thing we can be sure of is more volatility ahead.”
She added: “The situation around Ukraine and Russia remains very fluid and it continues to be the biggest threat to market sentiment.”
Emmanuel Cau, head of European equities strategy at Barclays, said: “Med [European] shares back to pre-conflict levels, tangible evidence of de-escalation may be needed for much more upward. ”
The subdued movements in Europe and Asia seemed to be followed by declining momentum on Wall Street after a solid close on Thursday, when the S&P 500 ended the session with 1.2 per cent. highest level in a month and the technology-focused Nasdaq Composite won 1.3 percent.
Futures markets indicated that the S&P 500 was expected to open 0.5 percent lower in New York, where contracts on the technology-focused Nasdaq 100 lost 0.7 percent.
In commodity markets, oil prices rose as investors weighed the impact of sanctions on Moscow.
Brent oil, the international benchmark, rose 0.7 per cent. Friday to $ 107.43 per. barrel, while West Texas Intermediate, the U.S. marker, added 1.25 percent. to $ 104.31.
Both benchmarks closed more than 8 percent higher on Thursday after a warning from the International Energy Agency that a fall in Russia’s crude oil supply to the global market threatened to become the “biggest supply crisis in decades”.