US and global stock indices fell as investors’ concerns about Russia’s growing military campaign in Ukraine grew.
The Dow Jones Industrial Average fell 521 points, or 1.5%, in morning trading. The S&P 500 fell 1.8 percent and the Nasdaq Composite fell 2.2 percent. Nine of the 11 sectors of the S&P 500 were in the red, with only energy and utility companies rising.
The strong number of jobs at the beginning of Friday was not enough to raise the main indices. Many investors remained focused on Russia’s escalating military campaign, trying to assess the extent to which harsh Western sanctions against Russia would harm economic growth. The invasion and rising commodity prices could further fuel inflation at a time when prices are already at a 40-year high.
New data on Friday showed that the United States added 678,000 jobs in February, more than 440,000 expected by economists polled by The Wall Street Journal. The Federal Reserve signaled that it was on track to raise interest rates by a quarter of a percentage point at its March meeting, removing some short-term interest rate uncertainty.
“The job report was strong,” said Amy Kong, chief investment officer at Barrett Asset Management. But “that doesn’t necessarily change the Fed’s position,” she said.
In the bond markets, the yield on the 10-year benchmark US government bond fell to 1.710%, down 1.843% on Thursday. Bond yields fluctuated sharply during the week as investors watched the Russian invasion, comments from Federal Reserve Chairman Jerome Powell and economic data.
Bitcoin prices have fallen to about $ 40,700 in recent trading.
Rising oil prices and the prospect of slower economic growth have also pushed investors to traditionally safer investments such as government bonds. Bond yields decline as prices rise. The Stoxx Europe 600 pan-Continental index fell 2.8% to its lowest level in nearly a year, reflecting fears that Europe will bear the brunt of the economic consequences of the Russia-Ukraine crisis.
“The United States is less vulnerable to the Russia-Ukraine crisis than you would see in Europe,” said Siema Shah, chief strategist at Principal Global Investors. For now, she said: “The market is watching [the situation] and saying that the US economy is strong. “
Shares of European banks were particularly hard on Friday. Société Générale lost about 9.5% after the French lender said on Thursday that its exposure to Russia amounted to 18.6 billion euros, equivalent to more than $ 20 billion, at the end of 2021. Shares of Italian bank UniCredit fell by about 13.6%. Meanwhile, Uniper, a large German energy company that owes about 950 million euros from the Russian company behind the Nord Stream 2 gas pipeline, fell 12 percent.
Movements on Friday end an unexpected week for world markets, with huge fluctuations in currencies, commodities and stock markets around the world. Many traders struggled to understand the impact of sanctions and the subsequent changes made by stock exchanges and financial firms around the world.
The New York Stock Exchange stopped trading with three exchange-traded funds linked to Russia after a similar move with NYSE-registered Russian stocks earlier this week. Russia’s central bank has left Moscow’s stock market almost closed for the fifth day in a row, protecting local stocks from a potential sell-off.
The Russian ruble fell again, with the currency falling 2.2% against the US dollar, trading at 112.53 per US dollar. The US dollar rose as the WSJ dollar index, which measures the currency against a basket of 16 others, rose 0.6 percent to trade near its highest level since July 2020. Meanwhile, the euro continued its recent decline.
Traders are trying to assess how much the crisis in Ukraine will harm growth and cause inflation.
Photo: BRENDAN MCDERMID / REUTERS
Global stock, bond, currency and commodity markets have changed dramatically this week. The sharp rise in oil prices, during which West Texas Intermediate crude briefly exceeded $ 116 for the first time since 2008, has raised concerns about stagflation, a combination of stifled economic growth and inflation.
“It’s starting to look a little staggering,” said Anviti Bahuguna, senior portfolio manager at Columbia Threadneedle. “We have inflation to last longer and growth is taking its toll.”
Analysts at the Goldman Sachs Group said Thursday that higher oil and gas prices are “the key inflation risk for the United States” and that higher commodity prices threaten economic growth. Any 10% increase in crude oil prices could reduce GDP growth, they said, as consumers withdraw from spending due to higher gas prices.
On Friday, Brent crude futures, the global benchmark, rose 3.2 percent to $ 114.03 a barrel.
Russia’s shelling of southern Ukraine, which sparked a fire at a nuclear power plant, heightened investor fears Friday morning over Moscow’s tactics and fears of a nuclear crash. However, officials said the fire did not affect major equipment, reducing fears of reactor damage.
Despite the volatility, stocks in New York were relatively resilient amid the conflict. All three major US indices have risen 2% or more since Russia invaded Ukraine last week. Still, trade has become more fragmented in recent days.
In the morning trade in New York Smith & Wesson Brands fell 19% after the arms manufacturer said sales fell by more than 30% during the holiday quarter. Gap rose about 10% after the clothing retailer reported results that exceeded expectations.
Asian stocks fell, partly on Thursday’s Wall Street, where technology stocks sold more than the wider market and Chinese listed companies stumbled.
Japan’s Nikkei 225 closed 2.2% lower on Friday. Hong Kong’s Hang Seng benchmark fell 2.5% to its lowest level since March 2020. In mainland China, the CSI 300 fell 1.2% to its lowest level since July 2020.
– Joe Wallace and Alexander Osipovich contributed to this article.
The United States and its allies have imposed heavy sanctions on Russia. WSJ’s Shelby Holiday is immersed in how these sanctions affect everyone, from President Vladimir Putin to ordinary Russian citizens. Photo: Pavel Golovkin / Associated Press
Write to Caitlin McCabe at [email protected] and Clarence Leong at [email protected]
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