Stocks deepen week’s losses as Ukraine invasion escalates

LONDON (Reuters) – Stocks extended losses throughout the week on Friday as investors piled into government bonds and gold in search of cover as they scrutinized the latest volatility in Russia’s escalating invasion of Ukraine, which included the seizure of a massive nuclear plant.

Industrial metals, grains and oil rose while Asian stocks fell to 16-month lows after news of a fire, which was later put out, near a Ukrainian nuclear facility after a fight with Russian forces. Read more

In Europe, Stokes (.stoxx) The index of 600 companies fell 1.4% to 431 points, hitting a new low for the year with the standard correction area, which means a decrease of 10% from its highs.

MSCI All Country Stock Index (.MIWD00000PUS) It fell 0.6% to 686 points, down about 10% for the year.

Michael Hewson, chief markets analyst, said that with a 25 basis point rate hike by the Federal Reserve later this month, all economic data such as US non-farm payrolls on Friday before the opening bell on Wall Street was Retreat back. in CMC Markets.

“The market is so heavily driven by headline risk that fundamentals hardly matter at the moment,” Hewson said.

Even though US interest rates were on track to rise, investors still piled into government bonds in search of safety, he said.

“You have rising inflation risks, you have a lot of doubt about what happens next on the main front, and the Russian president who is not ruling out nuclear weapons — that is a very toxic background,” Hewson said.

Crude oil rebounded, and aluminum touched a record $3,850 a tonne in London as the escalating conflict in Ukraine led to fears of supply pressures in the metal from major producer Russia.

Nickel touched an 11-year high for similar reasons.

“People came into this situation thinking that commodities were already tired of running, but the war just added a new lease of life,” said Mike Kelly, head of global multi-assets at PineBridge Investments.

“Super inflation is what people fear and the best hedge for that is energy and industrial metals,” said Mike Kelly, head of global multi-assets at PineBridge Investments.

In the currency markets, the euro lost further ground and was set to record its worst week against the dollar in nearly two years as the possibility of continued higher commodity prices continued to weigh on the outlook for European economic growth. Read more

S&P 500 and Nasdaq futures were down about 0.5%.

Asian sweating

The fire that broke out in a training building near the Zaporizhzhya nuclear power plant, the largest of its kind in Europe, during the fighting between Russian and Ukrainian forces, was later extinguished, authorities said on Friday. Read more

While that helped ease some of the initial panic that hit markets in Asia, investors remain very concerned about the conflict.

“Markets are concerned about the nuclear fallout. The risk is that there is a miscalculation or an overreaction and that the war is prolonged,” said Vasu Menon, executive director of investment strategy at OCBC Bank.

MSCI’s broadest index of Asia Pacific shares, excluding Japan (MIAPJ0000PUS.) It fell as much as 1.5% to 585.6, the lowest level since November 2020, taking losses to date to 7%.

Stock markets across Asia were in a sea of ​​red, with Japan (.N225) A loss of 2.2%, South Korea 1.1%, China (.SSEC) 0.9% and Hong Kong 2.5%, while Australia is heavy commodity (.AXJO) It decreased by 0.6%.

Investors sought safe haven in US Treasuries, sending benchmark 10-year yields down to 1.788%.

Oil prices have strengthened, with the market also focused on whether OPEC+ producers, including Saudi Arabia and Russia, will increase production from January.

Brent crude futures for May rose to $114.23 a barrel, last rising 0.2% to $110.69. The contract was down 2.2% on Thursday.

On the economic data front, Friday’s US employment report is expected to show another month of strong job growth, with Omicron COVID-19’s shifting contagion wave waning significantly.

Gold prices also rose on Friday, targeting their best weekly gain since May 2021. Spot gold rose 0.2% to $1,939.

Additional reporting by Anshuman Daga, Sikat Chatterjee and Sujata Rao; Editing by Edwina Gibbs and Sam Holmes

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