Home ›› 25 Mar 2022 ›› Stock
World share markets were choppy on Thursday as the Russia-Ukraine war kept oil above $120 a barrel, while “stagflation” worries rose on renewed talk of aggressive US interest rates hikes and slowing growth.
Europe’s main stock indexes barely budged and government bond yields edged up toward multi-year highs hit earlier in the week as March PMI data came in reassuringly robust.
Focus was otherwise on a Thursday special NATO summit in Brussels, which US President Joe Biden will attend, to discuss further responses to Russia’s month-old invasion of Ukraine, which Moscow calls a “special military operation”. Rabobank’s head of macro strategy, Elwin de Groot, said markets would be watching what emerges closely, especially how unified NATO members remain and what Biden can offer European countries to help wean themselves off Russian gas. “The NATO meeting is certainly important,” de Groot said. “At the minimum you would expect the members to come up with preparations for a possible further escalation in the Ukraine war.”
Wall Street futures were up a solid 0.6 per cent ahead of trading there, but the mood seemed changeable.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) recouped some of its early losses overnight but ended down 0.6 per cent after more falls in China and Hong
Kong (.HSI). Japan’s Nikkei (.N225) bucked the trend, rising 0.25 per cent to a nine-week high as its exporters cheered the yen falling to its lowest against the dollar since 2015.
At 1000 GMT, the dollar was up 0.4 per cent versus the yen, at 121.65 , with expectations that the Bank of Japan will be far behind other top central banks in raising interest rates.
Driving some of the volatility, Federal Reserve policymakers on Wednesday signalled they stood ready to take more aggressive action to bring down decades-high inflation, including a possible half-percentage-point rate hike at the next policy meeting in May. Those signals pushed all three main US share benchmarks 1 per cent lower overnight.
“The sharp hawkish repricing of Fed rate hike expectations has mainly benefited the US dollar against low yielding currencies whose own domestic central banks are expected to lag well behind the Fed in tightening policy,” MUFG currency analyst Lee Hardman wrote in a note to clients.
