new York The American markets have once again surprised with their optimism. As of Sunday night, it looked as if severe turmoil would ensue due to unprecedented financial sanctions against Russia. But the situation calmed down quickly – at least for the time being. “It’s very difficult to predict how long this situation will last,” said former Federal Reserve Chairman Bill Dudley.
However, further changes are on the horizon. The US stock exchanges Nyse and Nasdaq have stopped trading in several Russian companies after the latest round of sanctions in the Ukraine conflict. The websites of the stock exchanges initially only referred to general regulatory backgrounds. The Nasdaq said that the consequences of the sanctions for the affected companies would be examined. Nyse declined to comment when asked.
The trade stop affects, for example, the search engine operator Yandex, the online retailer Ozon Holdings, the financial service provider Qiwi, the telecom group Mobile TeleSystems and the steel and coal producer Mechel. No comments were initially available from the companies. So far it is only a temporary suspension from trading, not an exclusion.
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Russian companies face further problems. For example, the US financial services provider MSCI is considering removing Russian securities from its stock indices. It is questionable whether it is still possible to invest in Russia, MSCI manager Dimitris Melas told the Bloomberg financial service. The prerequisite is an open and functioning market. “At the moment the picture looks murky,” says Melas.
Wall Street cuts losses
The S&P was able to recoup almost all losses and closed 0.3 percent in the red at 4373 points. Still, it was the second straight month of losses. The broad stock index has lost almost nine percent since the beginning of the year.
The leading index Dow Jones lost 0.5 percent on Monday and closed at 33,893 points. The tech-heavy Nasdaq, on the other hand, advanced 0.4 percent to 13,751 points.
Independent capital markets advisor Ed Yardeni, who has made a name for himself as a Wall Street bull, maintains his positive forecast. He recommends energy and banking stocks. “I also see good medium-term opportunities for technology stocks, as well as for companies that invest heavily in new technologies,” he clarified and recommends investors not to be discouraged.
“It’s too late for panic selling,” he clarified. After all, it’s not just about finding the right time to jump, but also “getting back in at the right time. It’s extremely difficult,” he said. Equity strategists at JP Morgan and Fundstrat are even assuming that the worst of the first half of the year may be over for the time being.
Markets in Asia start stronger
Investors in Japan took advantage of the calm on Wall Street for a little morning sprint. The Nikkei 225 index, which includes Japan’s 225 largest companies, ended the lunch break at 26,916.97 points, up 1.5 percent from Monday’s close.
The trigger is falling interest rates for long-term US government bonds. Investors took this as a good sign for growth-oriented stocks in the high-tech sectors. In Japan, factory equipment makers and some IT-related stocks benefited most from the recovery.
Investors pushed the share price of the world’s largest tech investor Softbank up 3.2 percent to 5,290 yen in the first hour of trading. The industrial robot manufacturers Fanuc and Yaskawa increased by more than two percent, the heavy industry groups IHI and Mitsubishi Heavy even by 4.7 and 5.3 percent respectively. Mitsubishi Heavy has thus regained the level of the end of June 2021 after a low of more than six months.
Other Asian markets followed Japan’s lead, except for South Korea, where the bourse was closed for a holiday. Hong Kong’s Hangseng index rose 0.4 percent at the start of trading before falling to the previous day’s level by 10.30 a.m. local time, the Shanghai Composite index rose 0.2 percent and the Singapore Straits Times index, which was down against the previous day Asian trend had lost significantly, down 0.9 percent.
But strategists at Japanese investment bank Nomura warn against optimism: “The geopolitical events call for a cautious stance,” they explain in a report. Because of the tough sanctions, there is “considerable uncertainty” about possible retaliatory measures by Russia. But this week, the focus will be on the US Fed’s reaction to recent geopolitical events.
Government bonds are increasing
US Treasuries rose as investors increasingly sought safe havens. This caused yields on two-year government bonds to fall by the most in two years. The yield was 1.426 percent, down 15.8 basis points from Friday.
Dudley expects the Fed to hike interest rates by 0.25 percentage points at its next meeting in mid-March. However, a double hike suggested by some central bankers before the war in Ukraine “is now considered very unlikely. Injecting additional turmoil into the markets is not a good idea.”
Japanese government bonds fell just 0.005 percentage points to 0.175 percent on Tuesday morning.
Swiss franc rises as strong as 2018
The Swiss franc rose against the euro as strongly as it did in 2018. The euro exchange rate remained unchanged at 1.1219 dollars. The ruble had at times collapsed 30 percent against the dollar.
Exchange rates in Tokyo leveled off after the yen briefly strengthened on Monday. By just after 12 p.m., the dollar was down 0.3 percent to 115.15 yen. Around noon, the euro even rose above the previous day’s level. The Russian ruble, which fell 27 percent against the yen on Monday to 1,004 yen, stabilized around 1,060 yen on Tuesday morning.
Gold and oil hold high
US gold prices held steady Monday at a 13-month high set last week. A troy ounce cost $1,907.58.
Considerations that the US and its allies could release 60 million barrels of oil from their reserves eased some tension in the oil market. WTI grade also closed largely unchanged at $95.72 a barrel.
The price of gold in Japan fell slightly, the price of crude oil from Dubai more sharply by $3.60 to $95.60. In Japan, however, there is growing concern about its own gas supply, since the sanctions have made important oil and gas projects with Japanese participation in Siberia questionable.
For example, the Shell oil company wants to withdraw from the Sakhalin 2 gas project, in which Gazprom holds 50 percent. The Japanese trading houses Mitsui and Mitsubishi are there junior partners with at least 12.5 and 10 percent.
However, Mark Haefele, Chief Investment Officer of UBS Global Wealth Management, still believes commodities are a good “geopolitical hedge” given global inflationary trends.
cryptocurrencies
Market leader Bitcoin and the second largest digital currency, Ether, were able to increase significantly on Monday. Bitcoin was up 14 percent to $43,196. Ether gained eleven percent and cost $2916. Both Russia and Ukraine have strong interests in the cyber money.
Over the weekend, the Ukrainian government called for donations in bitcoin, ether and the stable currency tether, which is linked to the dollar. She has already raised over $20 million, a large portion of which has already been distributed to citizens and the military, according to the government.
Russia could use cryptocurrencies to circumvent sanctions, industry insiders believe. Meanwhile, regulators are trying to get new initiatives off the ground as quickly as possible.
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