Stocks stage tentative rebound after coordinated sanctions on Russia
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[February 25, 2022] By
Tommy Wilkes
LONDON (Reuters) - European stocks rose on
Friday following Wall Street's dramatic late rally, as investors
welcomed coordinated Western sanctions against Russia that targeted its
banks but left its energy sector largely untouched.
Oil prices initially fell back sharply but were back above $100 a barrel
in early European trading. [O/R]
The jump in stocks was modest, however, and markets remained down
significantly from levels at the start of the week after investors were
left stunned by Russian President Vladimir Putin's decision to invade
Ukraine.
On Friday, missiles pounded the Ukrainian capital as Russian forces
pressed their advance.
By 0930 GMT, the Euro STOXX was 0.72% higher while the FTSE 100 gained
1.1%. Germany's DAX nudged 0.05% higher.
Asian shares closed up higher. But on Wall Street - where stocks staged
a massive rebound after U.S. President Joe Biden unveiled sanctions on
Thursday - futures pointed to a lower open in the United States.
"Markets seem to be reducing tail risks. Additional sanctions announced
against Russia matter to Russia, but the domestic Russian economy does
not matter much to the global economy (and energy supplies are still
flowing)," said Paul Donovan, chief economist at UBS Global Wealth
Management.
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In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan
closed up 0.78%, Shanghai's composite index rallied 0.63% and Japan's
Nikkei gained 1.95%.
Russian stocks soared 14% - but that followed one of the three biggest
ever single-day stock market crashes in history.
OIL PRICE
Oil prices started climbing again on worries about supply disruptions,
with Brent crude rising 1.1% to $100.2 a barrel, while U.S. West Texas
Intermediate crude rose 0.46% to $93.29, although both benchmarks were
off their highs.
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A woman wearing a face mask walks past a screen displaying Hang Seng
Index, in Hong Kong, China February 24, 2022. REUTERS/Tyrone Siu
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Safe haven gold, which had jumped on Thursday, inched 0.35% higher to $1,909 an
ounce after easing back from a multi-month high of $1,973.96.
Reflecting the relative calm in financial markets, yields on 10-year U.S.
Treasuries was at 1.944% after an initial slide to 1.84% on Thursday, its
biggest daily drop since late November.
After some dramatic moves in currency markets on Thursday, including more than
1% falls in most European currencies, foreign exchange prices were much calmer.
The U.S. dollar index, which measures the greenback against a basket of major
currencies, was little changed at 97.185, having risen on Thursday to levels
last seen during the first wave of the coronavirus pandemic.
The Russian rouble rose and was at 85.52 against the dollar, clawing back from a
record low of 89.986.
With Russian troops pressing towards the Ukrainian capital and more casualties
expected on both sides, many investors are bracing for a further ratcheting up
of sanctions from the West.
"While U.S. sanctions have so far been limited, given the escalation in Russian
actions, there will inevitably be a more strident Western response in the coming
days. European sanctions, on the other hand, have been more forceful, with
Germany stopping approval of the Nord Stream 2 pipeline," said Seema Shah, chief
global strategist, Principal Global Investors.
"Although difficult, during a rapidly developing geopolitical conflict,
investors are best suited to stay level-headed, considering that fundamentals
are ultimately the driver of long-term investment returns."
(Additional reporting by Kanupriya Kapoor in Singapore; Editing by Alison
Williams)
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