Geoffrey Smith 

Investing.com — After conducting drills at the Ukrainian border, Russia announced that some troops were returning to their base. This causes markets to rally. Stocks will open sharply higher unless they are disturbed by the U.S. publishing January producer price inflation data. China is trying to lower iron ore price, as the mining industry keeps producing cash. Airbnb and Marriott release earnings reports, while the American Petroleum Institute releases its weekly U.S. inventories report. What you need to know about the financial markets on Tuesday, February 15th.

1. Russian pull-back drives market rally

European stocks and U.S. futures rallied along with high-yielding currencies, after Russia’s Defense Ministry said that some of the 100,000+ troops involved in exercises on the border with Ukraine .

These comments were supported by footage purporting to show heavy equipment and tank formations moving from their former positions at the Ukrainian border. Following a highly orchestrated live televised meeting of President Vladimir Putin with his Foreign Minister Sergey Lavrov Monday, the two men agreed to continue their diplomatic engagement.

Russia has published an alternative draft of a law which would recognize east Ukrainian breakaway republics established in response to Russia’s invasion in 2014. It would serve as a prelude for incorporating them in the Russian Federation like it did with Crimea.

2. To test the nerves of the market, use PPI

Now that war has been ruled out, the focus can shift to inflation. At 8:30 am ET (1330 GMT), the U.S. will release its January report. It is expected that prices will rise again at 0.5%, up from 0.3% December.

December’s print had been the weakest in over a year, prompting hopes that the sequence of strong monthly price increases might be coming to an end. These hopes may be shattered by high energy prices and a series of recent announcements from companies stating that they will not increase their prices in the next months.

This measure is more forward-looking and will likely slow to 9.1%, from 9.7% the previous month. Separately, the New York for February – due for release at the same time – is expected to bounce back from January’s Covid-hit low.

3. Stocks to Open Sharply Higher

The U.S. stock market is expected to open higher in the wake of the Russian news, but they will still be sensitive to corporate earnings.

At 6:15 am ET, the Dow Jones Industrial Average was 1.1% higher than at 0.5%. NASDAQ 100 futures had risen 1.9%.

It’s a busy day for earnings, with , Ecolab (NYSE:) and all due to report early, alongside Fidelity National Info (NYSE:). With Airbnb, the most exciting news comes after close. Devon Energy Wynn Resorts and CF Industries (NYSE 🙂 will each offer their perspectives on the high oil price and recovery in travel and entertainment.

Intel (NASDAQ) will also be in the spotlight, reportedly as a consolation prize for GlobalFoundries.

4. China’s zig-zag policy hits iron ore; miners churn out cash

Some interesting news came out of the mining industry overnight, with BHP (OTC) and Glencore(OTC:), both producing cash at record rates. BHP announced that it would pay a record $7.6B in dividends during the first half its fiscal year. Glencore, however, reported dividends and buybacks of $4 billion.

Glencore shares rose 1.9% on the news that the mining and commodities trading company will reserve $1.5 billion for litigation costs in the wake of an investigation by multiple jurisdictions into possible bribery. It is finally addressing a problem that has plagued the stock for years.

However, commodity markets eased along with fears of supply disruption from Russia, while iron ore futures already tumbled through an important support level after China’s government warned against ‘speculation’ and ‘hoarding’. In recent months, iron ore rallied after China relaxed pollution-related steel output restrictions and also loosening its monetary policy in an effort to support the struggling real estate industry.

5. The oil market slumps while war fears recede

As the Geopolitical Risk Premium that was accrued over the past week evaporated, crude oil prices dropped by almost $3 per barrel.

At 6:30 am ET futures had fallen 3.0% to $92.61/barrel, and 2.8% to $93.81/barrel

This slightly relaxed state will enable the market to concentrate on U.S. supplies data at the American Petroleum Institute’s weekly inventory report, which is published at 4:30 ET. Analysts predict a decline of around 1.8 million barrels compared to last week.