Trading in world markets was marked by mixed results amid the continuation of the ongoing Russia-Ukraine military conflict and the imposition of economic sanctions on Russia by the United States, EU countries, the UK, Japan and Australia. More than 1.3 million people have fled Ukraine and the situation looks set to become Europe’s most profound refugee crisis according to UNHCR.
Oil prices spiked as high as $116 per barrel while gold added to a weekly advance amid ongoing geopolitical tensions. Concerns about slowing economic growth and inflationary pressures also remained on investors’ radars. The coming week is expected to favour bears again, given the elevated volatility unless the Ukraine situation subsides.
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Canadian markets generated a positive return for the week. The benchmark S&P/TSX Composite Index closed up 1.4% as upbeat economic data and firm commodity prices outweighed concerns about the Russia-Ukraine conflict. The Ivey Purchasing Managers Index in Canada increased to 60.6 in February of 2022 from 50.7 in the prior month, signalling a continued improvement in business conditions in Canada, a report from the Richard Ivey School of Business said. It was the highest reading since November 2021.
Stocks were under pressure as worries about Ukraine led to continued weakness on Wall Street. For the week, the Dow Jones and the S&P 500 both fell 1.3% with the Dow closing lower for the fourth straight week. The tech-rich Nasdaq plunged by 2.8%. The Cboe Volatility Index (VIX) reached its highest point in over a year amid market turbulence. A second straight month of stronger-than-expected U.S. labor data seemed to have a secondary role in shaping sentiment.
The U.S. and other global allies have imposed unprecedented sanctions aimed at cutting off Russia from participating in the global economy. Meanwhile, the markets continued to brace for tightening monetary policy following this week’s testimony by Fed Chairman Jerome Powell, during which he said he will propose a 25 basis-point hike at its meeting in two weeks.
Mexico’s IPC gained 1.46%. Mexico will not send arms to Ukraine as lawmakers from the eastern European nation requested. “We don’t send weapons anywhere, we’re pacifists,” President López Obrador said at the conclusion of his regular news conference on Friday. Mexico has not imposed any sanctions on Russia.
In Brazil, the Bovespa was up 1%. Brazil’s economy grew by 4.6% in 2021, more than offsetting the slump in 2020, the government announced Friday. Particularly noteworthy is the information and communications sector, which grew by 12.3% compared to 2020, transportation, which increased by 11.4%, and construction, which grew by 9.7% last year. The Latin American country exported more than it imported last month, and the trade balance registered a surplus of US$4 billion.
Japan’s assets were lower with the Nikkei 225 Index down 1.85%. The Japanese government imposed sanctions on Russia, coordinating its actions with other Western nations. The Asian country will also tighten exports to Russia of semiconductors and other technology products. Experts say that Tokyo’s imposition of sanctions on Russia is almost certainly the final nail in the coffin of Japan’s ambition to resume control of the disputed Kuril Islands.
Chinese markets fell for the week as the Ukraine conflict and disappointing economic data dampened risk appetite. China’s bank regulator said Beijing will not join the United States and European governments in imposing financial sanctions on Russia. Chinese Foreign Minister Wang Yi told US Secretary of State Antony Blinken that China opposes any moves that “add fuel to the flames” in Ukraine. China is a major buyer of Russian oil and gas. Total trade between the two countries climbed roughly 36% in 2021 to a record USD 146.9 billion, according to Chinese customs data.
Australian markets snapped a five-day winning streak on Friday but still managed to end the week 1.61% higher. Gold miners outperformed, tracking firmer bullion prices. Retail trade data for January and business conditions and sentiments data for February reflected the strength and resilience of the Australian economy in an uncertain market scenario.
European shares fell sharply with the European Union (EU) joining the U.S. in imposing sanctions on Russia. Germany’s DAX Index and France’s CAC 40 Index dropped more than 10%, while Italy’s FTSE MIB Index lost more than 12%. At the beginning of the week, the most serious of the sanctions was imposed – the cutting off of most of the Russian banks from using the SWIFT international settlements system. As the week progressed many western companies announced their exit from the Russian market.
In Poland, the WIG20 gave up 2.64%. The country is now at the front line of humanitarian efforts for refugees fleeing Ukraine. Since the violence began, more than 650,000 people have crossed into Poland, according to Humanity United.
In Hungary, the BUX tanked 12.07%. Some 104,000 refugees from Ukraine have arrived in Hungary up to this point SchengenVisaInfo.com reports. In addition, the United Nations is projecting that nearly 250,000 refugees will arrive in Hungary before the end of the war, as reported by About Hungary.
REST OF EUROPE
In Russia, the Moscow Exchange (MOEX) will be closed to trading until at least next Wednesday, marking a record in the country’s modern history. The MOEX Index, which is denominated in rubles, posted a 16.7% decline from last Thursday through Monday (Feb.28)-the day when trading operations were suspended. The Russian ruble plunged on international currency markets. In the UK, the FTSE shrunk by 6.71%. The UK joined the U.S. in imposing sanctions on Russia. In Switzerland, the SMI sank 5.73%.
(Note: Trading between 27/02-03/03/2022)
In Israel, trading in the Tel Aviv Stock Exchange (TASE) was marked by increases in prices in most of the leading share indices. The TA-35 index increased by 0.8%, bringing year-to-date cumulative losses to 1.7%. The Bank of Israel announced that the Composite State of the Economy Index for the month of January 2022 increased by a moderate rise of 0.12%, a significantly lower rate compared with the months of October and November 2021.
The central bank also released figures indicating that foreign investors acquired of US 420 million net in shares in December 2021, with a total for 2021 of US$ 4 billion net acquisitions.
In Saudi Arabia, stocks ended higher this week, with the TASI index jumping 3.73%. Saudi stock exchange Tadawul Group reported a 17% increase in profit to SR587 million ($157 million) in 2021 in its first post-listing earnings results. The Group’s board proposed an annual dividend payout of SR3 per share.
In South Africa, stocks as measured by the JSE Top 40 returned 0.94%. But as the Ukraine crisis goes on unabated, many foreign investors have started pulling their money out of the JSE and other emerging markets’ stock exchanges and are turning to trusted safe havens like gold and US treasury bonds again.
Nigeria’s stock markets generated a negative return for the week with the NGX All Share Index dropping 0.13% amidst sell-offs. At the close of market on Friday, the stock exchange market value stood at N25.48 trillion. In currencies, the exchange rate between the naira and the US dollar closed at N416.67/$1 at the official Investors and Exporters (I&E) window.
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Kyriaki Balkoudi is a markets editor for World Markets Daily. She has a bachelor’s degree in Balkans Studies from Aristotle University of Thessaloniki, Greece and a master’s degree in International Politics from City University London, UK.
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