Global stocks hit three-week lows and oil rose on Monday as worries increased that Russia will invade Ukraine.
Russian forces killed a group of five saboteurs who breached the country’s southwest border from Ukraine on Monday, news agencies quoted the military as saying, an accusation that Kyiv dismissed as the latest in a series of fakes.
Kyiv and the West fear that a border incident near eastern Ukraine could be used as a pretext for Moscow to attack its neighbour. Russia denies such plans.
Markets are on high alert for any escalation in the crisis.
MSCI’s world equity index fell 0.4% to 700.11, with Monday’s public holiday in the United States, which will keep Wall Street closed, thinning trade and adding to the volatility.
European stocks dropped 1.65% to their lowest in more than four months. British stocks fell 0.5%. Shares in companies exposed to Russia and Ukraine fell heavily.
U.S. stock futures and European stocks lost earlier gains made on news that U.S. President Joe Biden and Russian President Vladimir Putin had agreed in principle to hold a summit on the Ukraine crisis.
The Kremlin said there were no concrete plans in place for a summit, though a call or meeting could be set up at any time.
“The Kremlin made clear today that they are in no rush for a summit with Biden,” said Tim Ash, strategist at BlueBay Asset Management.
British foreign minister Liz Truss said she was stepping up preparations with allies for a worst-case scenario, adding that a Russian invasion of Ukraine was highly likely.
In a reminder of the stakes, Reuters reported Biden had prepared a package of sanctions that includes barring U.S. financial institutions from processing transactions for major Russian banks.
The rouble slid nearly 3% against the dollar and Russian shares slumped 9% their lowest in 14 months.
The U.S. dollar index dipped 0.1% to 95.668, well short of a 1-1/2 year high of 97.441 hit last month.
The euro was little changed at $1.1327, while yields on German 10-year government bonds, seen as Europe’s safest asset, hit two-week lows at 0.185%. [FRX/]
A preliminary Purchasing Managers’ Index survey showed the euro zone economy rebounded sharply this month as an easing of coronavirus restrictions gave a boost to the dominant service industry.
“A Russian invasion of Ukraine would make the job of central banks across Europe much harder,” said Matteo Cominetta, senior economist at Barings Investment Institute.
“Investors should position for even higher uncertainty and probability of policy mistakes.”
Markets are also expecting aggressive policy tightening by the U.S. Federal Reserve as inflation runs rampant. The Fed’s favoured measure of core inflation is due out later this week and is forecast to show an annual rise of 5.1% – the fastest pace since the early 1980s.
At least six Fed officials are set to speak this week and markets will be hyper-sensitive to their views on a possible hike of 50 basis points in March.
Recent commentary has leant against such a drastic step and futures have scaled back the chance of a half-point rise to around 20% from well above 50% a week ago.
In oil markets, Brent crude rose by $1 to $94.41 on the Ukraine crisis, while U.S. crude also gained $1 to $91.98.
Oil had suffered its first weekly loss in two months last week, taking it off seven-year highs, amid signs of progress on an Iran deal that could release new supply into the market.
Iranian foreign ministry spokesman Saeed Khatibzadeh said “significant progress” had been made in talks to revive Iran’s 2015 nuclear agreement on Monday after a senior European Union official said on Friday that a deal was “very, very close”. [O/R]
Gold has benefited from its status as one of the oldest of safe harbours, climbing to nine-month highs of $1,908 an ounce, before dropping back to $1,893 an ounce. [GOL/]
(Additional reporting by Wayne Cole in Sydney; Editing by Catherine Evans)
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
