Yesterday, the US imposed sanctions against Russia. "We're implementing full blocking sanctions on two large Russian financial institutions: VEB and their military bank," President Joe Biden said in a speech. These sanctions should cut off the Russian government from Western funding. The US is also imposing a ban on the purchase of US bonds. "We'll also impose sanctions on Russia's elites and their family members. They share the corrupt gains of the Kremlin policies and should share in the pain as well," Biden said. Biden also noted that if Russia decides to expand its invasion, the US and its allies are ready to impose additional sanctions. The reaction of the financial markets was restrained.
By the close of the day, the Dow Jones (US30) decreased by 1.01%, the S&P 500 (US500) fell by 1.42%, and the NASDAQ (US100) technology index lost 1.23%. Negative statistics also contributed to the decline in US indices. The US CB consumer confidence index fell to 110.5 in February, although higher than the analysts' consensus forecast of 110.0. The Conference Board attributed the decline in confidence to rising inflationary pressures and Americans' growing pessimism over economic prospects.
For its part, Russia yesterday ratified the treaty on the recognition of the republics. When asked about the borders, Russian President Putin said that Russia recognized the republics according to their constitution, that is, according to the regions that are part of Ukraine, not along the line of demarcation. And this means that the situation can deteriorate sharply at any moment. NATO Secretary, General Jens Stoltenberg, said that Russia would not stop planning a full-scale invasion of Ukraine. The US has decided to move 800 troops, 20 AH-64 Apache helicopters, and eight F-35A fighter jets from its military bases in Germany to the Baltic region. Twelve Apache helicopters from Greece will be sent to Poland.
Cathie Wood's ARK Fund continues to buy falling stocks. On Friday, Ark Invest bought shares in streaming platform Roku (694,584 shares worth $78.1 million), shares in video conferencing platform Zoom Video (82,488 shares wort $10.5 million), shares in an entertainment company and e-commerce platform Sea Ltd (40,384 shares worth $5.2 million) and online video game platform Roblox (65,057 shares worth $3.2 million).
European stock indices traded without a single dynamic yesterday. German DAX (DE30) decreased by 0.26%, French CAC 40 (FR40) fell by 0.01%. At the same time, Spanish index IBEX 35 (ES35) gained 0.05%, British FTSE 100 (UK100) added 0.13%. The EU has agreed on sanctions against Russia and is ready to take further action if Russia continues to escalate the situation. The sanctions will affect 27 people and organizations associated with the defense, banking, and financial sectors. It is also considering the adoption of sanctions, implying a ban on entry and freezing of assets in the EU for all State Duma deputies. But according to preliminary information, Russia has prepared for sanctions by increasing its gold and foreign currency reserves to $640 billion.
The European Union has begun to look for gas diversification, as Europe is too dependent on Russian gas. Germany's energy regulator said it was suspending the Nord Stream 2 gas pipeline certification at the request of German Chancellor Olaf Scholz, as Russia recognized the two self-proclaimed republics in eastern Ukraine.
According to Bank of America, oil prices could jump another $5-20 if the situation in Ukraine escalates. At the same time, if the situation "cools down" in the near future, there is a high probability of a decrease by $2-4. Also, investors should not forget that Iran is getting closer to lifting sanctions, which could lead to the release of Iranian oil to the world market. If this happens, oil prices will fall sharply.
Yesterday, wheat futures also rose sharply, posting their sharpest jump in three and a half years, while corn futures hit an eight-month high on fears that the conflict could disrupt grain supplies from the Black Sea export region.
Gold increased by 8% in the past two months amid the geopolitical crisis in Eastern Europe. Platinum and palladium are also rising on fears of supply disruptions.
Asian stock indices are trading flat on Wednesday. Japan's Nikkei 225 (JP225) decreased by 1.71%, Hong Kong's Hang Seng (HK50) gained 0.45%, and Australia's S&P/ASX 200 (AU200) added 0.62%. The Reserve Bank of New Zealand announced a third consecutive interest rate hike on Wednesday, raising the benchmark interest rate by 25 basis points to 1% as expected. The New Zealand dollar rose 0.6% on the news and shows its longest daily growth streak in almost two years. Mortgage interest rates are falling in China. Core inflation in Singapore increased to 2.4% in annual terms in January, the highest level in more than nine years.
Main market quotes:
S&P 500 (F) (US500) 4,304.76 −44.11 (−1.01%)
Dow Jones (US30) 33,596.61 −482.57 (−1.42%)
DAX (DE40) 14,693.00 −38.12 (−0.26%)
FTSE 100 (UK100) 7,494.21 +9.88 (+0.13%)
USD Index 96.11 0.00 (0.00)
- – New Zealand RBNZ Interest Rate Decision at 03:00 (GMT+2);
- – New Zealand RBNZ Monetary Policy Report at 03:00 (GMT+2);
- – New Zealand RBNZ Press Conference at 04:00 (GMT+2);
- – Singapore Consumer Price Index (m/m) at 07:00 (GMT+2);
- – UK Monetary Policy Report Hearings at 11:30 (GMT+2);
- – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2).
by , 2022.02.23
We advise you to get acquainted with the daily forecasts for the major currency pairs.This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
Open Account