world markets

Bearish mood as geopolitical issues continue to dictate trading

From 07-11/03/2022

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Equities traded lower across the world as uncertainty about the Russia-Ukraine conflict continued to dent risk appetite. Investor sentiment moved firmly into risk-off mode amid rising worries over the negative effect of sanctions on Russia. The US, the G7 and the EU decided to revoke Russia’s most favoured nation status from March 11 and the exodus of European companies from Russia continued.

And as many central banks continue to shift toward a more hawkish stance, the world now also faces a scenario where interest rates are being lifted at a time when the sharp rises in prices of commodities and basic goods put a break on growth.


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AMERICAS

CANADA

The Canadian market gained this week. Stocks as measured by the benchmark S&P/TSX Composite Index returned 0.28%. The Canadian economy added 336,600 jobs in February, data released by Statistics Canada showed. It was the biggest addition in employment since September 2020. Economists had forecast an addition of 160,000 jobs. The jobless rate fell to 5.5% last month from 6.5% in January, much lower than market expectations of 6.2%.

US

Stock markets lost ground over another week of extreme volatility. The Dow Jones lost about 2% in the week, going down for a fifth straight week. The tech-rich Nasdaq and the S&P 500 fell 3.5% and 2.9%, respectively in the week. The government reported that the CPI for February reached a 7.9% annual rate – the highest level since the 1982.

With this inflation, U.S. Federal Reserve policymakers are widely expected to begin lifting interest rates when they conclude a two-day meeting next Wednesday. Data showing a bigger than expected drop in U.S. consumer sentiment in the month of March weighed as well on the market.  The Senate passed a $1.5 trillion omnibus bill that will avert a partial government shutdown

LATAM

In Mexico, the IPC ticked down 0.04%.The war in Ukraine, rising commodities prices and global inflation have brought about “a period of uncertain times” for emerging markets, Mexican Finance Minister Rogelio Ramírez de la O said Thursday at the Latin America Capital Markets Summit hosted by Latin Finance in New York. This volatile situation “demands extra careful attention to market events and to our own policies,” he added.

In Brazil, the BOVESPA plunged 2%. The National Wide Consumer Price Index (IPCA), which measures official inflation, recorded a price increase of 1.01% in February, the highest rate for the month since 2015. The data were released today (11) by the Brazilian Institute of Geography and Statistics (IBGE). Petrobras raised gasoline prices by 18% and diesel by 25%.

ASIA/PACIFIC

JAPAN

Japanese equities recorded a weekly loss. Bank of Japan Governor Haruhiko Kuroda said ruled out the chance of tightening monetary policy or withdrawing stimulus to deal with any rise in inflation driven by soaring fuel costs. Producer prices in the country in February rose 9.3% from a year earlier, marking their steepest growth since comparable data became available in 1981- driven primarily by higher energy prices. Japan’s economic growth in the fourth quarter of 2021 was downgraded to an annualized 4.6%, from 5.4%, on a smaller rise in private demand.

CHINA

Chinese stock markets traded lower Chinese Premier Li Keqiang said that it was important to support Russia and Ukraine in attempts to reach an agreement. Beijing set its GDP target for 2022 at “about 5.5%” or higher than consensus expectations of less than 5%. It also set a headline deficit target at 2.8% of GDP. In other economic news, February’s exports rose 16.3% y-o-y,  the PPI rose 8.8% y-o-y as expected, while the CPI was unchanged at 0.9%.

The U.S. Securities and Exchange Commission (SEC) released the names of the first 5 Chinese companies listed on US stock exchanges which will be forced to delist in 3 years’ time,  if they fail to comply with audit requirements.  The China Securities Regulatory Commission (CSRC) told banks that it would permit some US listings by companies that meet certain criteria, such as those that do not possess sensitive data.

AUSTRALIA

The ASX200 dropped 0.66% this week. On Friday- when the growing prospect of stagflation in the US saw early gains on the ASX 200 evaporate -the Reserve Bank of Australia governor Philip Lowe warned borrowers to start preparing for higher interest rates this year with inflation set to increase due to the recent surge in global commodity prices.

EUROPE

EUROZONE

European equities rebounded in a volatile week of trading with the pan-European STOXX Europe 600 Index returning 2.23%. The European Central Bank (ECB) surprised markets with the announcement that it could wind up its bond-buying program sooner than expected. ECB President Christine Lagarde also said that the first rate hike would occur in the weeks or months after the end of net asset purchasing. The European Commission announced a strategic plan to reduce Russian energy imports. Elsewhere, Germany’s industrial production rose by a sharp 2.7% in January,

CEE

In Poland, the WIG20 jumped 5.98%. The National Bank of Poland raised its benchmark reference rate by 75bps to 3.5% on Tuesday to its highest level since February of 2013 and above expectations of a 50bps increase. The move aimed to combat inflationary pressures brought by higher prices for energy and agricultural commodities amid the ongoing Russia-Ukraine conflict. Poland shares its southeastern border with western Ukraine, and it has received more than 1.4 Ukrainian refugees, according to data from the United Nations (UN).

In Hungary, the BUX soared by 6.61%. The country which shares a very small portion of its northeastern border with Ukraine, has received more than 200,000 Ukrainian refugees, according to UN data. The annual inflation rate in Hungary rose to 8.3% in February of 2022 from 7.9% in the previous month, matching market estimations. It was the highest reading since August of 2007 and well above the central bank’s upper limit target of 4%.

REST OF EUROPE

Russia’s stock market remained closed this week. Stock trading on the Moscow Exchange has been closed since Feb. 25, one of the longest-ever shutdowns for a market of Russia’s size. The Bank of Russia confirmed on Saturday that it decided not to resume trading in the period from March 14 to 18, 2022, except for some non-open-market transactions with settlement in rubles, as well as in the SPFI market section.

The UK’s FTSE 100 Index rose 2.41%. U.K. GDP grew 0.8% in January, in contrast to the 0.2% fall in December. Economists had forecast a marginal growth of 0.2% for January. And the visible trade deficit widened to GBP 26.5 billion in January from GBP 12.35 billion in December,  the Office for National Statistics said on Friday. The UK said it would stop importing Russian oil and gas by the end of 2022, supporting a similar move by the U.S.  In Switzerland, stocks as measured by the SMI returned 1.73%.

MIDDLE EAST

(Note: Trading between 06-10/03/2022)

In Israel, trading in the Tel Aviv Stock Exchange (TASE)was marked by decreases in the leading share indices, similar to the trend in stock exchanges worldwide. The TA-35 index  decreased by 0.7%, compared with a decrease of about 5% in the leading stock exchanges in the US and Europe. This is according to the information contained in the weekly stock market report, released by TASE.

In Saudi Arabia, the TASI fell 0.94% in line with a fall in the oil market. Oil took a breather after a period of wild trading and a surge in prices that followed Russia’s military intervention in Ukraine. In other news, Saudi oil giant, Aramco, will participate in a major integrated refinery and petrochemical complex in Northeast China.

AFRICA

In South Africa, the JSE Top 40 was off 1.50%. War, slow reform and blackouts slow SA’s growth Annabel Bishop, chief economist at Investec wrote in a note on Thursday. The bank and wealth manager forecasts growth of 3% by 2026, as major reforms are implemented, but the outlook is now bleak at 2.6%.

In Nigeria, the stock market rebounded from its bearish trade last week. The All Share Index returned 0.36%. A total turnover of 1.374 billion shares worth N23.786 billion in 28,809 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 1.668 billion shares valued at N19.481 billion that exchanged hands last week in 25,979 deals.


Content Disclaimer:
This page has been prepared for informational purposes only. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.


For any comments, suggestions or corrections email: kbalkoudi@worldmarketsdaily.com
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.


References:
“Global Markets Weekly Update”. T. Rowe Price. March 11, 2022
“Weekly market wrap”. Edward Jones. March 11, 2022
“Weekly Market Recap”. John Hancock Investments. March 11, 2022
“Schwab Market Update”. Charles Schwab. March 11, 2022
“Market Analysis”. Edmond de Rothschild. March 11, 2022


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