Wall Street and European equity markets rebounded on Thursday as signs that Russia could help stave off a full blown energy crisis that dampened inflation worries.
The blue-chip S&P 500 index rose 1.4 percent in early New York deals, also spurred by Republicans and Democrats as they near an agreement to temporarily raise the national debt ceiling to avoid a potentially chaotic US default.
The technology-oriented Nasdaq Composite gained 1.6 percent, with both US markets now firmly in positive territory for October after losing around 5 percent each last month.
The moves came after gas prices fell in Europe and the UK, tempered by Russian President Vladimir Putin, who said his country was ready to stabilize the market after prices rose on Wednesday.
Russia, a major gas supplier to Europe, has been accused by some European politicians of deliberately withholding supplies in order to gain approval for the controversial Nord Stream 2 pipeline, which would deliver the fuel directly to Germany.
Russia’s Energy Minister Alexander Novak said late Wednesday that the certification of the recently completed pipeline would send a “positive signal” that “could cool the current situation down a bit”.
Hopes of Russian aid also helped European stocks recover from Wednesday’s losses. The benchmark stock index Stoxx 600 rose 1.6 percent, while the London-based FTSE 100 rose 1.3 percent.
UK gas contracts for November delivery, which hit more than £ 4 per Therm on Wednesday, fell to £ 2.59 by Thursday afternoon in London.
Olivier Marciot, cross-asset investment manager at fund manager Unigestion, warned that while electricity prices could fall, markets would remain vulnerable to broader price pressures that hit consumers and drive central banks to hike interest rates.
Headline consumer price inflation in the US topped 5 percent for three months and hit a 29-year high in Germany.
US Energy Secretary Jennifer Granholm told the Financial Times on Wednesday that the White House may be releasing strategic oil reserves to halt gas shortages that are driving crude oil prices soaring. Brent crude fell 0.7 percent to $ 80.51 a barrel after approaching $ 83.50 on Wednesday.
Meanwhile, a potential deal to extend the U.S. borrowing limit through December would also give President Joe Biden time to focus on finalizing deals on his $ 1.2 trillion infrastructure bill and a social spending package of $ 3.5 To concentrate trillions of dollars, analysts said.
“That takes a lot of relief because it’s not just about the debt ceiling,” said Edward Park, chief investment officer at wealth manager Brooks Macdonald.
“The idea of a debt ceiling agreement that gives Democrats time to put their social and infrastructure packages together is positive for risk-taking.”
The benchmark US Treasury bond yield, reversing its rate, rose 0.03 percentage points to 1.549 percent ahead of September non-farm employment data released Friday, which may affect the direction of monetary policy.
Analysts predict US employers will have created nearly 500,000 new jobs in September. Any higher figure, accompanied by a decline in the unemployment rate, would anticipate market expectations of the first rate hike after the pandemic, said Brian Nick, chief investment strategist at Nuveen.
“It will enable the Federal Reserve to worry about wage inflation as well as all other factors,” he said.
The dollar index, which measures the US currency against six others, fell 0.1 percent.