Economy
Global equities rise, gold falls after Russia avoids default
|
Global equity markets gained on Friday after traders cheered a Russian bond payment that averted a historic sovereign default, while gold prices dropped as demand for the safe-haven metal eased following the start of the U.S. interest rate hike cycle.
The Russian finance ministry announced on Thursday that it had sent funds to cover $117 million in coupon payments on two dollar-denominated sovereign bonds that came due this week.
The payments calmed investor worries that a Russia sovereign default, which would have been its first in a century, could rattle already nervous markets. Western sanctions have hobbled Russia’s financial dealings since it invaded Ukraine on Feb. 24.
“If you think about where we could have been if Western governments had disallowed the use of frozen funds for coupon payments on Russian sovereign bonds, we would be sitting on a default of a world economy,” said Jamie Cox, managing partner at Harris Financial Group in Virginia.
“As a result of that, some of the biggest impacts to the global financial system are being put off into the future – that’s good.”
MSCI’s gauge of world stocks, which tracks equities in 50 countries across the globe gained 0.89%, while MSCI’s broadest index of Asia-Pacific shares outside Japan had closed 0.25% higher overnight.
European stocks closed higher as peace talks to end the Russia-Ukraine conflict continued amid heavy fighting.
The pan-European STOXX 600 index rose 0.91%.
Wall Street’s three major indexes closed higher, boosted by recently battered technology stocks, after talks between U.S. President Joe Biden and Chinese President Xi Jinping over the Ukraine crisis ended without big surprises.
The Dow Jones Industrial Average rose 0.8% to 34,754.93, the S&P 500 gained 1.17% to 4,463.12 and the Nasdaq Composite added 2.05% to 13,893.84.
“We’re in the middle of a relief rally after such a deep sell-off in tech in advance of the likely path of rates by the Fed. Now that they’ve basically removed all the uncertainty about rates, tech stocks can reprice,” Cox added.
The U.S. dollar index bounced back from recent declines as Federal Reserve officials said the central bank may need to be more aggressive to deal with inflation, while the dollar hit a fresh six-year high against the yen.
The dollar index rose 0.269%, with the euro down 0.38% to $1.1047.
Gold prices were on track for their biggest weekly drop in nearly four months, in the wake of the Fed interest rate hike and a rebound in the U.S dollar.
Spot gold dropped 1.2% to $1,919.36 an ounce, while U.S. gold futures fell 0.33% to $1,928.20 an ounce.
U.S Treasury yields long-term edged down early as lack of a resolution of the Russia-Ukraine conflict weighed, while short-term yields increased, further flattening the curve.
The benchmark 10-year yield was down to 2.1548% from 2.167% and the 30-year yield was at 2.4225% from 2.461% on Thursday, in a sign of risk aversion.
Yields on two-year Treasuries, which closely reflect Fed interest rate expectations, were slightly up, instead, at 1.9465% from 1.915%.
Oil prices settled higher, but posted a second straight weekly loss, after a volatile trading week with no easy replacement for Russian barrels in a tight market.
Brent crude futures settled up 1.2% at $107.93 a barrel, a day after surging nearly 9% in the biggest daily percentage gain since mid-2020. U.S. West Texas Intermediate (WTI) crude futures settled up 1.7% at $104.70 a barrel.
(Reporting by Chibuike Oguh in New York; Editing by Edmund Blair and Jonathan Oatis)
Economy
Japanese government maintains view that economy is in moderate recovery – ForexLive
Economy
Can falling interest rates improve fairness in the economy? – The Globe and Mail
The ‘poor borrower’ narrative rules in media coverage of the Bank of Canada and high interest rates, and that’s appropriate.
A lot of people have been financially slammed by the rate hikes of the past couple of years, which have made it much more expensive to carry a mortgage, lines of credit and other borrowing. The latest from the Bank of Canada suggests rate cuts will come as soon as this summer, which on the whole would be a welcome development. It’s not just borrowers who need relief – the boarder economy has slowed to a crawl because of high borrowing costs.
But high rates are also a big win for some people. Specifically, those who have little or no debt and who have a significant amount of money sitting in savings products and guaranteed investment certificates. The country’s most well-off people, in other words.
Lower rates will mean diminished returns for savers and less interest paid by borrowers. It’s a stretch to say lower rates will improve financial inequality, but they do add a little more fairness to our financial system.
Wealth inequality is often presented as the chasm between well-off people able to pay for houses, vehicles, trips and high-end restaurant meals and those who are driving record use of food banks and living in tent cities. High interest rates and inflation have given us more nuance in wealth inequality. People fortunate enough to have bought houses in recent years are staggering as they try to manage mortgage payments that have risen by hundreds of dollars a month. You can see their struggles in rising numbers of late payments and debt defaults.
Rates are expected to fall in a measured, gradual way, which means their impact on financial inequality won’t be an instant gamechanger. But if the Bank of Canada cuts 0.25 of a percentage point off the overnight rate in June and again in July, many borrowers will start noticing how much less interest they’re paying, and savers will find themselves earning less.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
A look at two strategies for paying off debt – the debt avalanche and the debt snowball. I’ll go with the avalanche.
How not to ruin your kitchen countertop
Anyone who has renovated a kitchen lately knows how expensive stone countertops can be. Look after yours by protecting it from a few common kitchen items.
What you need to know about stock market corrections
A helpful explanation of stock market corrections. It seems an opportune time to look at corrections, given how volatile stocks have been lately. Like scouts, investors should always be prepared.
Food inflation requires more careful grocery shopping. Here’s a roundup of food products – cookies, snacks, ice cream – that don’t taste as good as they used to. Food companies have always adjusted their recipes from time to time. Is this happening more because of inflation’s impact on raw material prices? A U.S. list – most products are available are familiar to Canadians, too.
Ask Rob
Q: I have Tangerine children’s accounts for my kids. Can you suggest a better alternative?
A: The rate on the Tangerine children’s account is 0.8 per cent, which actually compares well to the big banks and their comparable accounts. For kids aged 13 and up, check out something new called the JA Money Card.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
A comprehensive guide on how to build a good credit score.
In the social sphere
Social Media: An offbeat way of fighting high food costs
Watch: Is now the hardest time ever to buy a home?
Money-Free Zone: Singer-songwriter Maggie Rogers has a new album called Don’t Forget Me and it’s generating some buzz because it’s a great listen. Smooth vocals and a laid back countryish vibe that hits a faster pace on one of my favourite cuts, Drunk.
More PF from The Globe
– He keeps ‘a few thousand in crisp new bills’ at home – is that a good idea?
– The pension pivot: Employers recognizing that workers need help with debt as much as retirement
– Her bond ETF is ‘a dud and not promising at all’ – should she sell?
– Despite high fees, Canadians remain perplexingly loyal to mutual funds. Here’s why
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be childfree or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You’re not bad at money – you’re suffering from money shame • Retirement might look different for Gen Z and millennials. Here’s how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home downpayment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada’s top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer’s guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
Economy
LIVE: Freeland joins panel on Indigenous economy – CTV News Montreal
[unable to retrieve full-text content]
LIVE: Freeland joins panel on Indigenous economy CTV News Montreal
Source link
-
Health24 hours ago
See how chicken farmers are trying to stop the spread of bird flu – Fox 46 Charlotte
-
Science22 hours ago
Osoyoos commuters invited to celebrate Earth Day with the Leg Day challenge – Oliver/Osoyoos News – Castanet.net
-
Politics22 hours ago
Haberman on why David Pecker testifying is ‘fundamentally different’ – CNN
-
News22 hours ago
Freeland defends budget measures, as premiers push back on federal involvement – CBC News
-
Economy22 hours ago
The Fed's Forecasting Method Looks Increasingly Outdated as Bernanke Pitches an Alternative – Bloomberg
-
Health21 hours ago
It's possible to rely on plant proteins without sacrificing training gains, new studies say – The Globe and Mail
-
Tech21 hours ago
Meta Expands VR Operating System to Third-Party Hardware Makers – MacRumors
-
Business21 hours ago
Gildan replacing five directors ahead of AGM, will back two Browning West nominees – Yahoo Canada Finance