- US futures and European shares fell on Thursday ahead of key inflation data and with Russia/Ukraine talks in focus.
- Asian markets rallied overnight, with Japan's Nikkei leaping 3.9%, the most in almost 2 years.
- Oil rose 5%, paring some of the previous day's losses, as the chances of OPEC raising output appeared to wane.
US stock futures and European shares fell on Thursday, with investors nervous given ongoing diplomatic talks between Russia and Ukraine in Turkey and a reading of consumer inflation coming up.
Ukraine and Russia held face-to-face meetings between officials since the invasion in Turkey later on. Ukrainian foreign minister Dmytro Kuleba said that his expectations were limited ahead of talks with his Russian counterpart, Sergey Lavrov.
The meeting follows claims from Ukrainian President Volodymyr Zelenskyy that Russian troops carried out a direct strike on a Mariupol maternity hospital, with officials calling it a "war crime", according to the BBC.
The S&P 500 futures fell 0.6%, while those on the NASDAQ 100 dropped 0.8% and those on the Dow Jones fell 0.6%.
The MSCI world equity index was up 0.20%, while the MSCI Asia Pacific returned 3.09%, thanks to a rally in Japanese stocks that boosted the Nikkei by almost 4%, its biggest jump in over 21 months.
European markets came under pressure, with the Stoxx 600 dropping 1.2% and Frankfurt's DAX down 2.3%, ahead of a European Central Bank meeting to discuss inflation and growth in the eurozone.
While geopolitics would remain the primary focus, Caxton's head of market intelligence, Michael Brown, said other events could be market catalysts.
"The ECB's latest policy decision is one, with policymakers in Frankfurt set to outline their plans to gradually withdraw from providing massive monetary stimulus, while grappling with a sharp upgrade to inflation forecasts, and downgrading growth expectations, as a result of sanctions imposed on Russia, and war in Ukraine," he wrote.
US consumer inflation data for February is also due. Economists expect to see a rise of 7.9% in the consumer price index (CPI), following January's 7.5% increase. Markets have pared back their expectations for a half-point rise next week in US interest rates, given the uncertainty stemming from Russia's war in Ukraine, but surging price pressures mean the Federal Reserve is about to embark on a series of sustained rate hikes.
"We expect another hot CPI print this morning, which will likely continue to make Powell anxious. An upside surprise may encourage the market to price a higher probability of a 50bp hike at the March and/or May meeting. However, we would encourage fading such a move as the Fed is currently hiking on eggshells given geopolitical uncertainty," Bank of America analysts said in a note.
Brent crude oil was up over 4% at $115.60 a barrel, paring some of Wednesday's steep losses, after the United Arab Emirates appeared to climb down from an earlier pledge to raise output. In the two weeks since Russia invaded Ukraine, the price of oil has risen by 18% to around its highest in 14 years.
Gold was down slightly, as it lost 0.04% to $1,987.50 on Thursday. The metal hit $2,000 an ounce earlier in the week, as investors rushed to buy perceived safe-haven assets.
Cryptocurrency markets dropped on Thursday after the EU said crypto would be included in sanctions against Russia. Bitcoin and ethereum plunged 6.86% and 5.39% respectively. Altcoins like solana and avalanche also suffered losses over the past day, down 7.21% and 6.87%.