Europe close: Stocks bounce as investors analyse sanctions and amid reports of possible Ukraine-Russia talks
European shares rebounded strongly after a late Wall Street rally overnight that was fuelled by news that some of the heaviest possible sanctions against Moscow had not yet been adopted, no widening in the conflict and reports of possible talks between Moscow and Kiev.
In the words of Bloomberg's John Authers, that rally reflected the belief that Putin "will get what he wants", although there were also those warning of the long-term effects that the sanctions which had already been approved would have on Russia's economy, and perhaps even more so the isolation that the country would increasingly face.
Indeed, even top-ranked academics and prestigious journalists in Russia itself had come out to criticise the invasion publicly.
Against that backdrop, the pan-European Stoxx 600 bounced back 3.32% to end at 453.53, alongside a 8.44% rebound in Poland's WIG 20 and a 26.12% rebound on Moscow's RTS index to 194.03.
Gold and Brent crude oil were lower alongside and the euro higher.
"So far the situation in Ukraine appears to be proceeding in a similar fashion to yesterday, with a further ramp-up in the conflict yet to develop," was IG chief market analyst Chris Beauchamp's take on matters.
"Reports of potential peace feelers being put out by both sides seemed to offer hope, but Putin’s terms will likely be too much for Ukraine to stomach as yet."
In the background, the bulk of Russian forces in the north were now reportedly around 50 miles from Ukraine's capital, Kiev, and some reports indicated that Russian units had sustained heavy casualties throughout the country.
Early in the afternoon, news broke that Ukrainian President, Volodymir Zelensky, was open to talks with Moscow in order to stop the bloodshed, including around the subject of the country's neutrality, and that Russian President Vladimir Putin had accepted to send a delegation.
Yet the latest reports indicated that Ukrainian officials would only travel to a venue such as Warsaw and not to the Belarussian capital of Minsk. Furthermore, there was no indication of Kiev acceding to Russian demands to surrender.
In equity news, shares in UK educational publisher Pearson surged 12% as the company reported higher profits and issued a strong outlook.
Polish stocks were in focus, with banks higher on news that cutting Russia out of the Swift international payments system would only be used as a last resort.
Anglo-Russian precious metals miner Polymetal rose 17% after the heavy losses sustained during the previous session on fears of production disruption and sanctions.
Automakers were also in favour, with Porsche and Volkswagen ahead as they issued details of a possible Porsche listing.
Swiss Re fell as the reinsurance company swung to a smaller-than-expected full-year profit in 2021.
Shares in Valeo were down by more than 10% as the auto supplier warned that its margins would fall this year before improving in 2025.
Strategists were mixed regarding the outlook for stock markets.
In the case of those at Bank of America, in a research note sent to clients, the strategy team led by Michael Hartnett said that geopolitics would exacerbate the inflation, interest rate and growth shocks of 2022. Indeed, when adjusted for inflation, interest rates were so negative that they had been left at levels that over the past 250 years had been synonomous with crashes, panics and wars.
For US stocks at least, strategists at Citi sounded a guardedly constructive note.
"Our base case view is that US equity markets can eventually recover from said perfect storm and work higher," they said.
Yet they cautioned that higher oil prices meant an increased "recession risk", especially when aligned with interest rate hikes by the US Federal Reserve, "although that was not a foregone conclusion".
According to Citi, much of the -5% pullback in the US S&P 500 since mid-February had been the result of Russia/Ukraine concerns.