The weekend approaches with great tension in the geopolitical scene, culminating with the Russian attacks – and its subsequent occupation – on the Zaporizhzhia nuclear power plant, the largest in Europe.
The markets, as might be expected, were not indifferent to the latest chapters on the war. Asian stocks all closed in the red, with some indicators reaching the lowest level since the end of 2020. European stocks fell sharply, reaching the lowest level in a year. US index futures were also lower this morning, albeit less markedly.
Losses in the Stoxx 600 index reached nearly 3% this morning, heralding the close of the worst week since March 2020. The lower willingness to risk is expressed in other markets: gold and sovereign bonds – from the US and Europe – gain value as investors seek refuge. Oil was heading for its biggest weekly increase in nearly two years.
The siege of a Ukrainian nuclear power plant by Russian forces set off global alarm bells. Emergency services extinguished the fire, radiation levels remained unchanged and there were no casualties, but Russian military forces continue to bomb Ukraine. Negotiations between the two countries did not reach a common term, except with regard to the creation of a humanitarian corridor for the evacuation of civilians.
Investors are reducing their positions in European equities to seek alternatives that are less impacted by the war in Eastern Europe. And from now on, the detachment between European and North American markets will be more evident. Especially if the impression of French President Emmanuel Macron is confirmed, after an hour-and-a-half phone conversation with Vladimir Putin. “The worst is yet to come,” a source at Palácio do Eliseu told reporters. Describing the conversation between the leaders, the French government source said that the Russian president’s objective is to take over all of Ukraine and, in order to fulfill it, he shows “a very great determination”. On his Twitter account, President Macron said he would continue to strive to “avoid the worst”.
Today the market will also follow the employment report in the United States, one of the last big data before the monetary policy meeting of the Fed, on the 15th and 16th. payment, against an increase of 467 thousand in the previous reading. The unemployment rate expected by analysts is 3.9%, practically stable compared to 4% in the previous report.
Earlier in the week, Fed Chair Jerome Powell has said on two occasions that the US central bank is ready to start a series of interest rate hikes to curb inflation – he said he is leaning towards a 0-plus rate hike. 25 percentage point of the cost of money. And that he will be aware of the impact of the war in Ukraine on the economy.
Commodities further extended the rally as Russia’s invasion of Ukraine continues to shake global markets and fuel fears of supply cuts.
Tensions rose in the early hours of Friday after Russia stepped up its offensive by attacking a Ukrainian nuclear plant, the biggest in Europe, according to local officials. From crude oil to wheat and aluminum, prices soared, with commodities staging their biggest weekly rise since 1974 and the days of the oil crisis in the same decade.
Russia’s growing isolation is increasingly suffocating a key supplier of energy, grains and metals, prompting fears of prolonged shortages and further global inflation. Banks, investors and shipowners are avoiding doing business with Russia because of uncertainty about payments, while shipping companies are canceling or not accepting reservations from the region.
The Russia-Ukraine war continues to weigh heavily on investor decisions, especially after the French government warned that “the worst is yet to come” following talks between President Emmanuel Macron and Russia’s Vladimir Putin.
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