LONDON (Reuters) – Stocks extended gains on Friday after Russian President Vladimir Putin said there was some progress in Moscow’s talks with Ukraine, although the rally was not enough to halt stocks’ trend for a fifth consecutive weekly loss.
Putin did not give any details and the recent talks between the two countries have not made much progress. Read more
The war in Ukraine, now in its third week, and the prospect of central banks tightening monetary policy to tame inflation as the global economy begins to slow have sent financial markets on a choppy ride with mostly high ups and downs.
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Thursday’s data showed US inflation rose to a four-decade high, prompting traders to raise their bets on a Federal Reserve interest rate hike beginning next week and triggering a sell-off on Thursday.
The Bank of England is expected to press ahead next week, especially after economic growth numbers for January came in stronger than expected on Friday. A more hawkish-than-expected European Central Bank this week added to the sense that policy makers will not be deterred by the uncertainty created by the war in Ukraine and will intensify.
But after another busy week and with commodity prices dropping from recent highs, traders searched for reasons to buy back riskier assets including stocks.
“In general, central banks now have less flexibility to cushion shocks to stock markets, as they have succeeded in doing in recent years,” said Mark Heffel, chief investment officer for global wealth management at UBS.
But he said simply selling the stock is not recommended.
“Our view remains that simply selling risky assets is not the best response to the war in Ukraine,” he said, advising investors to reduce equity risks.
The late recovery in Asia also helped the mood. After pulling back early in the day due to regulatory concerns, the Hong Kong stock market has partially recovered as a source told Reuters that consultations between Chinese and US regulators on review and regulatory cooperation are moving “relatively smoothly”. Read more
By 1215 GMT, the Euro STOXX was up 2.18%. (.stoxx) While the German DAX index (.GDAXI) It rose 2.96% and the British FTSE index (.FTSE) 1.75%.
Wall Street futures extended gains ahead of the US open.
MSCI’s broadest index of Asia Pacific shares outside Japan (MIAPJ0000PUS.) It closed 1.2% lower after Thursday’s decline in Wall Strayer extended into the Asian session.
Despite Friday’s recovery, sentiment remains weak across the markets.
On Friday, the Western allies appeared intent on revoking Russia’s “most favored nation” status over its invasion of Ukraine. This would add to the pressure on the economy, which is already heading into what the International Monetary Fund predicts as a “deep recession”. Read more
MSCI World Index (.MIWD00000PUS) This week it is down 1.1% – on its way to its fifth weekly decline. The last time it fell was five weeks in a row in early 2018.
Euro back above $1.10
The euro recovered in line with the more bullish mood in stocks, and was last up 0.3% at $1.1025. The hawkish tone from the European Central Bank has largely failed to boost the momentum of the single currency as investors continue to worry about the impact of the war in Ukraine on the Eurozone economy.
“Another day – before the war – EUR/USD could have enjoyed lasting gains on the back of hawks from the European Central Bank,” said Chris Turner, head of global markets at ING.
“However, it seems unlikely that the European Central Bank, which is hardly a match for the (US Federal Reserve) tightening, can generate a stronger euro in the face of significant trade losses.
The yen fell to its weakest level against the dollar since January 2017, hitting its lowest level at 117.06 per dollar.
dollar index (DXY.) It gave up early gains and remained unchanged on the day at 98.377, below the more than 1-1/2-year high of 99.418 hit on Monday.
In the commodity markets, oil prices rose but were far from the multi-year highs reached earlier in the week. US crude rose 1.63 percent to $107.75 a barrel. Brent crude rose 1.72 percent to 111.21 dollars a barrel.
Spot gold fell 1.3% to $1,969 an ounce, after trading as high as $2,070 on Tuesday.
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Additional reporting by Daniel Losink in Tokyo. Edited by Chizu Nomiyama
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