Marketmind: ECB, Inflation, Oil By Reuters

A look at the day ahead in markets from Sujata Rao

After the U.S. saw its biggest one-day gain since June 2020 and oil slumped 13%, it promises to be another eventful day.

World stocks have seized on a meeting later on Thursday between the foreign ministers of Ukraine and Russia and are up almost half a percent.

True, there does not seem much conviction behind the gains, with European futures only slightly higher and Wall Street so far tipped to open lower. Oil prices are trying to recover too after Wednesday’s fall that was driven by the UAE holding out the possibility of more supply from the OPEC+ group.

European markets are especially on edge before a meeting of the European Central Bank, which will have to walk a thin line between committing to tackle inflation and protecting economic growth.

Before Russia’s invasion of Ukraine the ECB was on track to announce an end to money-printing stimulus and open the way for interest rate hikes. But now while the Russia-linked economic hit is worsening by the day, inflation in the bloc is more than double the 2% target, exacerbated by a weaker euro.

Aside from the ECB meeting in Frankfurt, traders will keep an eye on Versailles where a EU leaders’ meeting kicks off later in the day. They will announce plans to wean the bloc off Russian energy but markets are keen to hear of any plans for additional fiscal stimulus, possibly financed by another round of joint borrowing.

Then, in the United States, February inflation is predicted at 7.8% year-on-year, surpassing January’s four-decade high 7.5%. But since then U.S. gasoline prices have rocketed higher, meaning an above-forecast print may well revive bets of a 50 basis-point interest rate rise at the Federal Reserve’s March 15-16 meeting.

Finally, foreign companies continue to flee Russia; miner Rio Tinto (NYSE:), Japan’s Sony (NYSE:) and Nintendo the latest to announce their exit. All this carries a cost of course– McDonald’s (NYSE:), for instance, says the temporary closure of its Russian restaurants will cost it $50 million a month.

Key developments that should provide more direction to markets on Thursday:

-Japan’s wholesale prices rise at record pace

– RICS housing survey

-ECB meeting

-U.S. CPI/initial jobless

-U.S. 30-yr bond auction

-Peru likely to raise interest rates by 50 bps