Calm of global investors in the face of the mutiny in Russia: closure of the markets

by

(Bloomberg) – From oil to stocks and currencies, global markets painted a picture of relative calm on Monday following a geopolitical shock that challenged Vladimir Putin’s regime in Russia.

Bloomberg’s Most Read

Oil soared more than 1% after falling nearly 4% last week, US stock futures rose and a dollar strength gauge fell 0.1% while most major currencies were trading in narrow ranges against the greenback.

While events in Russia had the potential to induce investors to sell riskier assets, the first steps were modest and reflected the impact of a brokered deal to halt the advance of the Wagner mercenary group towards Moscow. The deal includes dropping criminal mutiny charges against Yevgeny Prigozhin and his fighters.

“Even if the Prigozhin mutiny does not directly cause larger market moves, that could quickly change depending on how the political situation in Russia develops in the coming months,” said Erik Meyersson, chief market strategist. emerging markets at SEB AB, in a note. “Markets are likely to become more sensitive to domestic political issues in Russia.”

Contracts for the S&P 500 and Nasdaq 100 rose about 0.2%, recouping some of the lost ground that saw US stocks experience their worst week since March. Concern is growing in equity markets that central banks will have to raise interest rates to curb inflation and, in the process, shrink the economy.

Bonds rallied in Australia and New Zealand on Monday, echoing movements in Treasuries on Friday.

The S&P 500 index ended the shortened holiday week down 1.4%, while the benchmark Nasdaq 100 index fell 1.3% as investors took profits on tech names gaining from the year. Chipmakers Marvell Technology Inc. and GlobalFoundries Inc. were among Friday’s laggards, while lower Microsoft Corp. and Nvidia Corp. weighed on the gauges.

The second-quarter stock market rally – fueled by the frenzy of growth-focused AI stocks – is unraveling under the threat of further rate hikes and fears that the full economic impact of the central bank’s aggressive policy will unfold. still be felt.

Federal Reserve Chairman Jerome Powell dampened the mood last week when he said the United States may need one or two more rate hikes in 2023. Other Fed commentators spurned investors’ hopes of a rate cut this year: I have today, to stay where we are and stay here for the rest of this year and into next year,” the chairman said. of the Atlanta Fed, Raphael Bostic, at an event Friday.

Meanwhile, the US Manufacturing Purchasing Managers’ Index fell to 46.3 in June from 48.4 the previous period, the lowest since December.

Economic data from Germany and France raised fears of a slowdown in Europe, prompting Treasuries to participate in a rally in the global bond market as investors sought safe havens.

Key events this week:

  • U.S. New Home Sales, Durable Goods, Conference Board Consumer Confidence, Tuesday

  • ECB President Christine Lagarde speaks at the ECB Forum in Sintra, Portugal on Tuesday

  • Chinese industrial profits, Wednesday

  • U.S. wholesale inventories, goods trade balance, Wednesday

  • Federal Reserve to release results of annual banking sector stress test on Wednesday

  • Policy panel with ECB’s Christine Lagarde, Fed Chairman Jerome Powell, BOJ’s Kazuo Ueda and BOE’s Andrew Bailey at the ECB Forum in Sintra on Wednesday

  • Rate decision in Sweden, Thursday

  • US GDP, first jobless claims, Thursday

  • Atlanta Fed Chairman Rafael Bostic speaks on the U.S. economic outlook at an event in Dublin on Thursday

  • China Manufacturing PMI, Non-Manufacturing PMI, Friday

  • Eurozone CPI, Unemployment, Friday

  • Japan unemployment, industrial production, Tokyo CPI, Friday

  • U.S. personal income and spending, University of Michigan consumer sentiment, Friday

Some of the major movements in the markets:

Shares

  • S&P 500 futures rose 0.2% at 8:01 a.m. Tokyo time. The S&P 500 fell 0.8% on Friday

  • Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 1% on Friday

  • Nikkei 225 futures fell 0.4%

  • Australian S&P/ASX 200 index futures fell 0.2%

  • Hang Seng index futures fell 0.6%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro rose 0.1% to $1.0905

  • The Japanese yen rose 0.1% to 143.50 per dollar

  • The offshore yuan was little changed at 7.2099 to the dollar

  • The Aussie dollar was little changed at $0.6681

Cryptocurrencies

  • Bitcoin rose 0.4% to $30,491.78

  • Ether rose 0.3% to $1,900.93

Obligations

Goods

  • West Texas Intermediate crude rose 1.2% to $70.01 a barrel

  • Spot gold rose 0.2% to $1,924.23 an ounce

This story was produced with assistance from Bloomberg Automation.

–With help from Carly Wanna, Isabelle Lee and Matthew Burgess.

Bloomberg Businessweek’s Most Read

©2023 Bloomberg LP

Leave a Comment