Wall Street and European stocks slipped, oil prices rose, the rouble plunged and US government bonds rallied after new sanctions imposed on Russia reverberated through financial markets.
The S&P 500 US stock index fell 0.2 per cent in New York, with more than 70 per cent of the companies within the benchmark declining in value. The technology-heavy Nasdaq Composite eked out a 0.4 per cent advance, rebounding from an earlier loss of as much as 1.1 per cent.
In Europe, the regional Stoxx 600 share gauge closed 0.1 per cent lower. The Stoxx banks sub-index fell 5.7 per cent as traders responded to uncertainty about western allies locking some Russian lenders out of the Swift payments system. Germany’s Xetra Dax lost 0.7 per cent.
The moves came after Russian president Vladimir Putin put his country’s nuclear forces on high alert and western powers imposed sanctions on Russia’s central bank in response to the invasion of Ukraine.
Global equities had rallied on Friday as traders reacted to punitive measures against Russia that did not target the nation’s energy exports. But after financial sanctions against Russia were ratcheted up over the weekend, fund managers de-risked their portfolios, closing out strong bets on the global economy and future central bank policy while loading up on low-risk and easily tradeable assets.
“Investors are reducing their active bets,” said Michael Metcalfe, head of macro strategy at State Street. “Right now is a time to take stock, reduce positions and try to assess all the possible outcomes that could arise” from the geopolitical situation, he added.
Traders were closely watching for any signals of stress in dollar funding markets, as banks and traders looked for the sanctions to spill out into global funding markets. Despite shifts in currency swap and other markets, investors and strategists said there were not yet indications of severe funding strains.
Brent crude, the international oil benchmark, rose 3.1 per cent to settle at $100.99 a barrel. Futures linked to TTF, Europe’s wholesale natural gas price, rose 11 per cent to €103 per megawatt hour.
The yield on the two-year US Treasury note dropped 0.12 percentage points to 1.45 per cent, reflecting a significant rise in the price of the highly liquid debt instrument. The benchmark 10-year Treasury also rallied, with the yield falling 0.14 percentage points to 1.83 per cent.
“It’s a flight to safety,” said Tatjana Greil Castro, co-head of public markets at credit investor Muzinich & Co.
“It’s a dash for liquid assets and a little bit of pricing out higher interest rates,” she added, “although the Fed will keep some resolve.”
The moves came as traders rapidly dialled back how much they expect the Federal Reserve to lift interest rates as the US central bank attempts to curb surging inflation. Money markets had earlier this month tipped the Fed to raise rates to roughly 1.7 per cent by the end of the year. By the end of Monday, those bets had dropped back to just under 1.4 per cent.
The rouble dropped as much as 29 per cent to almost 118 against the US dollar on Monday morning, later trimming some of its declines. Russia’s central bank more than doubled interest rates to 20 per cent on Monday and banned foreign selling of local securities in a bid to stem the fallout from sanctions.
The New York Stock Exchange and Nasdaq also halted trading in Russian securities listed on the two bourses, with the NYSE citing “regulatory concern”. The list of stocks that stopped trading in New York included Russian internet company Yandex and gaming company Nexters.
Elsewhere, shares in BP dropped 4 per cent after the British group said at the weekend it would divest its near-20 per cent stake in Russian state oil provider Rosneft.
In Asia, Hong Kong’s benchmark Hang Seng index fell as much as 1.6 per cent to its lowest level in almost a year before paring losses to close down 0.2 per cent.
Unhedged — Markets, finance and strong opinion
Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here to get the newsletter sent straight to your inbox every weekday
from WordPress https://ift.tt/WueopZY
via IFTTT
No comments:
Post a Comment