New sanctions against Russia is troubling markets

2022-02-28T19:06:22
against Russia Currency market Gold performance New sanctions Russian-Ukrainian crisis
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New sanctions against Russia is troubling marketsThe Russian-Ukrainian crisis is raging, leaving markets confused about the rise and fall of the stock market,
due to news and events. 

Evest follows market developments in the following report.

 

Topics:

The European Union is imposing new sanctions against Russia

Market Developments

Asian stocks

Currency market

Gold performance

 

The European Union is imposing new sanctions against Russia

The European Union has embargoed the listing of Russian state-owned companies’ securities on its exchanges and has also expanded the restrictions on increasing euro debt,
as part of the second package of sanctions against Russia.

According to a document published in the Official Journal of the European Union, it is prohibited to include and provide services on the trading floors of the European Union of Securities issued by State-owned companies from the Russian Federation.

European depositors are also prohibited from providing any post-April 12 securities services to individuals and legal entities of the Russian Federation.

This is in addition to the European Union’s expansion of the list of companies and banks that will not be able to raise funds in the European Union by offering new debt and equity. 

In particular, Alfa-Bank, Russian Railways and Sofcomflot fell under restrictions.

The European Union prohibited the direct or indirect purchase, sale,
or provision of investment services or participation in the preparation of securities and money market instruments issued by these issuers after April 12.

Earlier last week, the US imposed new sanctions on Russian companies that collect debt and finance stocks from US investors. 

The US list, like the EU list, includes Alfa-Bank, Russian Railways and Sovcomflot.

However, there are no restrictions on the purchase of new debt bonds for Gazprom, one of the most active Russian borrowers in the international capital markets listed by the European Union,
while the United States imposed a ban on the purchase of new debt bonds from Russian gas. 

 

Market Developments

Stock futures declined and oil prices jumped on Sunday evening as investors grappled with geopolitical developments,
including new sanctions imposed by Western countries against Russia.

Standard & Poor’s futures fell by 2.2%, while technology heavyweight Nasdaq futures fell by 2.4%.

The stock market culminated in a turbulent week on Friday, as investors shifted their bets heavily on how the Federal Reserve Board would proceed with rate hikes following the Russian invasion of Ukraine.

Standard & Poor’s finished up 0.8% for the four-day trading week. However, the broad index remained stuck in correction after falling by more than 10% from its January high on Tuesday.

The Nasdaq Composite Index ended up rising by 1.6% over the past four days,
while the Dow Jones Industrial Index itself lost significantly, ending the week somewhat steadily.

Asian stocks

Japan’s Nikkei Index made up for its early losses and recently rose by 0.2% to 26529.32.

The decline in electronics stocks was at the forefront of the loss in morning trading as uncertainty over the war in Ukraine continued. 

In the meantime, oil driller Inpex rose by 3.8% after gains in crude oil prices.

Investors have been focusing on headlines related to the conflict as Russian and Ukrainian officials prepare to meet.

The Kospi index in South Korea reversed its early fall and recently rose by 0.3% percent at 2685.57.

Car and technology stocks were at the forefront of early trading losses, as the Ukrainian crisis continued.

Investors were grappling with developments in the Russian invasion of Ukraine. 

The Western allies’ decision to expel some Russian banks from the global interbank network raised concerns about natural gas supplies and inflation while weakening the desire for risk,
although news of Russian and Ukrainian officials’ willingness for the first talks since the invasion eases tensions. 

Hong Kong’s Hang Seng index fell by 1.1% to 22,512.74 as rising geopolitical tensions were triggered by Western countries
s’ announcement over the weekend that they intended to cut off some Russian banks from the Swift network. 

In the meantime, given market uncertainty, there were expectations that the Federal Reserve take a very strong pace to increase the interest rate, KGI Research said. 

A mixed group of companies led the HSI index losses, with Sino Biopharm Pharmacy falling by 4.4%, AAC Technologies falling by 4.3%,
and Shenzhou International Group falling by 3.4%. 

The Hang Seng TECH index fell by 0.8% to 5069.86.

 

Chinese stocks

Chinese stocks fell in morning trading on Monday, extending losses incurred last week when the Russian invasion of Ukraine led to a decline in regional equities. 

There is more potential economic policy support from Beijing as the national annual sessions of the People’s Assembly, to be held in a few days, approach. 

The Shanghai Composite index fell by 0.7% to 3427.33, while the Shenzhen composite index declined by 0.9% to 2289.15.

The Chinext price index lost 0.3% to 2,846.50.

 

Currency market

Asian currencies weakened against the US dollar and the Japanese yen due to growing concern about the Russo-Ukrainian crisis
stimulating demand for safe haven for the Japanese dollar and yen. 

Komertz Bank said there was a general tendency to avoid risk and markets reacted negatively,
referring to recent sanctions imposed by Western countries against Russia and Russian President Putin to put the country’s nuclear deterrence forces on alert. 

The ICE US dollar index rose by 0.6% to 97.21, while the AUD/USD fell by 0.6% to 0.7183. The AUD/JPY currency pair fell by 0.3% to 82.98, and the SGD/JPY fell by 0.2% at 85.06.

Currency traders were watching the Russian ruble in early Asian trading.

Traders have so far said that if the currency is actually traded amid suggestions,
there is an unwillingness on the part of market participants to determine the price.

A senior Forks strategist said he suspected there was no proper market, with some banks closing in on Swift. 

Expectations were high that the ruble would decline strongly when liquidity returned,
with severe sanctions imposed on the country’s Russian banks and central bank.

On Sunday, Russian banks reported a ruble rate of between 110 and 120 against the dollar.

It traded at 75 before the Russian invasion of Ukraine and 83 on Friday.

 

Gold performance

Gold rose in early Asian trading as the Russian war against Ukraine boosted demand for safe-haven on the precious metal. 

The United States, the European Union, Canada and the United Kingdom announced over the weekend that they planned to cut off some Russian banks from Swift. 

They also said that they would work to prevent the Russian Central Bank from releasing its reserves of more than $600 billion that could be used to help the Russian economy. 

In the meantime, Russian President Putin has ordered the country’s nuclear deterrent forces to be set on high alert.

The spot gold price rose by 1.5% to 1917.21 dollars an ounce.

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