Markets Update Tuesday 22/02/2022 – Edgy

Frankfurt – 22/02/2022

Edgy

After two fragile weeks of trading, investors continued to hold back because of the Ukraine turmoil. Russian President Vladimir Putin had recognised the self-proclaimed Luhansk and Donetsk People’s Republics as sovereign countries the previous day against international protest and, in the meantime, obtained permission in parliament for Russian troops to be deployed. 

In the evening, Russia also announced that it was establishing diplomatic relations with Luhansk and Donetsk. According to the Russian Foreign Ministry, Russia wants to expand cooperation with the Donetsk and Luhansk regions. The USA has announced new sanctions against Russia because of the escalation in the Ukraine conflict. The punitive measures will be directed against two major banks, against trade in Russian government bonds and supporters of Putin, as US President Joe Biden announced in the evening.

US Markets at a glance

The further escalation in the Russia-Ukraine crisis caused losses on Wall Street on Tuesday. The Dow Jones extended its early losses intraday and ended 1.41 per cent weaker at 33,597.13 points. The NASDAQ Composite tech index also slipped, losing 1.23 per cent to 13,381.52 points.

The situation around the Ukraine conflict was the main cursor for the reopened US Markets to turn negative. “Now that Russia has officially recognised the eastern Ukrainian separatists and moved troops into the region, markets may start pricing in a full invasion,” ING said, according to Dow Jones Newswires.

Far East Markets at a glance

In Asia, there were again significant price losses. In Tokyo, the Japanese benchmark index Nikkei fell 1.71 per cent to 26,449.61 points on Tuesday, while the Shanghai Composite meanwhile moved 0.96 lower at 3,457.15 units in mainland China. Hong Kong’s Hang Seng also lost 2.69 per cent to 23,520 points.

A further escalation in the Ukraine conflict sent Asian markets tumbling on Tuesday. Moscow has recognised the eastern Ukrainian “people’s republics” of Donetsk and Luhansk as independent states. It also ordered the deployment of troops to the separatist areas. Western politicians strongly condemned Putin’s move, and the USA continues to warn against a Russian invasion of Ukraine.

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European Markets at a glance

European markets managed to digest the new developments in the Ukraine crisis. The EuroSTOXX 50 managed to shake off its early losses on Tuesday and ended Tuesday’s trading virtually unchanged at 3,985.47 points.

Although the DAX had slumped significantly at the start of trading on Tuesday, it was even able to turn positive as trading progressed before slipping back slightly. At the final bell, the DAX was down 0.26 per cent at 14,693 points. The TecDAX was also able to limit its initial losses and closed 0.23 per cent lighter at 3,148.44 points.

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Fear of war is sweeping the world. President Putin ordered the deployment of troops to eastern Ukraine to help it achieve peace, as he put it in the decree he signed on Monday evening. He also recognised the two self-proclaimed “people’s republics” of Luhansk and Donetsk as independent states. Nevertheless, market participants continued to hope for a diplomatic solution and returned to the stock market.

Forex, gold, oil and crypto

The situation in Ukraine is also having a significant impact on the other asset classes and is causing high fluctuations. As is so often the case in times of crisis, the greenback was initially sought after in the morning. The Euro slipped below 1.13 US dollars at times but was finally traded again at just under 1.1350 dollars.

On the commodities market, the oil price continued to rise. Brent North Sea oil traded for $96.88 per barrel today, while WTI cost $92.03.

Gold lost some of its value today after the price of the troy ounce had risen strongly in recent days. At the close of trading, the precious metal cost $1,898.

Cryptocurrencies recovered in the course of today after crashing had yesterday. Bitcoin gained 3.1 per cent to $38,200, while Ethereum added 2.2 per cent to $2,640. Similarly, XRP rose by 2.7 per cent to $0.72, while Cardano (ADA) gained 3.3 per cent to $0.89.

Corporate and world economic news

Economic data

The business climate in Germany brightened more than expected in February. The business climate index surveyed by the Ifo Institute rose to 98.9 (January revised: 96.0) points. Economists interviewed by Dow Jones Newswires had forecast an increase to only 96.5 points. The business sentiment index rose to 98.6 (revised 96.2) points from 96.4 points expected and the preliminary January reading of 96.1 points. The business expectations index climbed to 99.2 (revised 95.8) points. The forecast was only 96.0 points, based on a preliminary January value of 95.2 points. “The German economy is counting on an end to the Corona crisis. However, the escalation of the crisis over Ukraine remains a risk factor,” the Ifo Institute commented on the figures.

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Inflation in Italy has continued to rise and has reached its highest level since the introduction of the Euro in 1999. According to European calculations (HICP), consumer prices rose by 5.1 per cent in January compared to January last year, as the statistics office Istat announced on Tuesday after a second estimate. In December, the rate had been only 4.2 per cent. The first survey for January was thus revised downwards by 0.2 percentage points, surprising analysts. Compared to the previous month, inflation even came to a standstill.

Activity in the US economy picked up in February. IHS Markit’s composite index of private-sector production – industry and services combined – rose to 56.0 from 51.1 points in January. The manufacturing purchasing managers’ index rose to 57.5 from 55.5 the month before, while economists had expected a reading of 56.0. The index for the service sector rose to 56.7 from 51.2 points. The forecast had been for 52.2.

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