On the 25th (local time), the three major New York stock indices rebounded sharply all at once, hoping that geopolitical tensions might be eased following Russia’s remarks that it was ready for dialogue with Ukraine.
On the New York Stock Exchange (NYSE), the Dow closed at 34,05.75, up 834.92 points (2.51%) from the previous day. It was the largest increase since November 2020. The Nasdaq Composite, centered on technology stocks, rose 221.04 points (1.64%) to 13,694.62, and the S&P 500 index rose 95.95 points (2.24%) to 4384.65.
Weekly, the Dow fell 0.06%, marking the third straight week of declines despite a surge in the past two days. The Nasdaq and S&P 500 rose 1.16% and 0.82%, respectively.
Eleven sectors of the S&P 500 also rose at the same time. △Consumer discretionary 1.89% △Consumer staples 3.12% △Energy 2.74% △Financial 3.16% △Health care 3.03% △Industry 2.4% △Raw material 3.58% △Real estate 2.49% △Technology stock 1.37% △Communication service 1.48% △Utility 3.14%, etc. am.
The three major indices rose once more amid strong volatility as Russia and Ukraine discussed the possibility of negotiations. Investors also looked at the core personal consumption expenditure (PCE) indicator, which is the US Federal Reserve’s preferred price indicator.
Russian President Vladimir Putin [사진=스푸트니크·연합뉴스]
Stocks improved as Russia responded by saying it was ready to send a delegation to its ally Belarusian capital Minsk to negotiate with Ukraine.
Ukrainian President Serkh Nikkiporov said that Ukraine was ready to discuss an armistice and peace, Bloomberg reported. “I agree with the proposal of Russian President Vladimir Putin,” Nikkiporov said. Belarus, where Minsk, the meeting place originally proposed by Russia is located, is Russia’s representative ally.
Meanwhile, sanctions from Western countries, including the United States, continue. The United States has imposed sanctions and frozen assets on major banks, including the largest state-run bank, the Foreign Economic Bank of Korea (VEB) and the Special Defense Support Bank, PSB, as well as Russian President Putin and key figures in Russia. He also said that it would prevent a surge in oil prices by releasing strategic oil reserves, and prepared for the possibility of Russia weaponizing energy.
However, the exclusion of the SWIFT payment network, one of the biggest sanctions the West can impose on Russia, has not yet been made. If they are excluded from the payment network, Russian banks may experience disruptions to their various exports as their transactions with global financial institutions that trade in dollars may be cut off.
The European Union (EU) and the UK have also launched sanctions once morest Russia. Germany emphasized that it had agreed to suspend the approval process for the Northstream 2 gas pipeline project linking Russia and Germany. The EU also imposed financial sanctions on major banks and Russian politicians and worked closely with the US to introduce export controls on high-tech products, including electronics, computers, communications and security. It is judged that these products can also be used to strengthen Russia’s defense capabilities. The UK also said it would ban the export of all items that might be used for military purposes, such as parts for electronic devices and trucks, and limit the amount of deposits made by Russian citizens. All subsequent sanctions would also apply to Russia’s ally, Belarus.
Meanwhile, investors also took note of the January Core Personal Consumption Expenditure (PCE) index, which might influence Fed policy. The U.S. Department of Commerce said the core PCE index rose 5.2% year-over-year in January, the biggest gain since April 1983. This was slightly higher than the Dow Jones analyst estimate of 5.1%.
However, consumer spending did not decrease despite inflation. Consumer spending in January grew faster than the 1.6% forecast, up 2.1% year-over-year.
“Overall, the real economy appears to be doing better than we feared,” Paul Ashworth, chief economist for the US team at Capital Economics, told CNBC today. “The Russian invasion of Ukraine has reduced the likelihood that the Fed will raise rates by 0.5 percentage points at its March meeting, but the Fed will still stick to its plan to raise rates,” he said.
The yield on the 10-year U.S. Treasury fell to 1.97% from 1.972% the previous day.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), also known as the ‘Wall Street Fear Index’, fell 9.0% to 27.59.
Stock markets in major European countries also rose at the same time as investors watched the situation between Russia and Ukraine.
The London Stock Exchange’s FTSE 100 index rose 282.08 points (3.91%) to 7489.46 from the previous day. Germany’s Frankfurt Stock Exchange’s DAX Index rose 515.13p (3.67%) to 14,567.23, and France’s Paris Stock Exchange’s CAC40 Index closed at 6752.43, up 231.38p (3.55%). The Euro Stoxx50 index, a pan-European index, finished trading at 3970.69, up 141.40p (3.69%) from the previous day.
International oil prices rose at the beginning of the market on concerns that western sanctions on Russia might cause a supply disruption, but later declined once more, saying that Russia and Ukraine might reach an agreement.
On the New York Mercantile Exchange (NYMEX), the West Texas Intermediate (WTI) for April contract closed at $91.59 per barrel on the same day, down $1.22 (1.31%) from the battlefield. On the London ICE Futures Exchange, the price of Brent crude for April fell by 0.89 dollars (1.07%) to 97.93 dollars per barrel.
The day before, WTI broke the $100 per barrel for the first time since 2014 on news of Russia’s invasion of Ukraine. Brent crude also rose to $105 a barrel. However, oil prices regained stability as the US announced that it would release strategic oil stockpiles with its allies and Ukraine had entered into a meeting for negotiations. “The sanctions will not target oil flows,” Amos Hochstein, senior adviser for energy security at the US State Department, told Bloomberg TV on the same day. “If we sanction Russian oil and gas to put pressure on Russia, energy prices will skyrocket,” he added.
“European and American politicians have been hesitant to impose sanctions on Russia’s energy sector,” SEB analyst Biyane Shielddrop told CNBC on the same day.
However, experts said investors should keep an eye on the situation amid high uncertainty. Phil Flynn, a senior analyst at Price Futures Group, told Archyde.com on Wednesday that ongoing discussions regarding strategic oil reserves are weighing on oil prices, but uncertainty over the weekend will push up oil prices.
Gold prices plummeted on news that geopolitical tensions between Russia and Ukraine might ease. On the New York Mercantile Exchange (COMEX), the price of gold futures for April delivery fell by $38.70 (2.01%) per ounce to close at $1887.60.
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- Hye-won Jang
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