MILANO – European equity markets hit a mini-rebound, while for the third day in a row the Moscow Stock Exchange. The squares of the Old Continent recovered after the weak opening and reassured with Wall Street, after the hearing of Powell (Fed) which confirms that despite the uncertainty it will be appropriate to raise rates. The US central bank, however, is orienting itself towards an increase of 25 basis points, setting aside for now the more aggressive hypothesis of moving even by 50 points as some claimed. At the end of the day London salt 1.49%, Frankfurt adds 0.69% e Paris 1.59%. Also Milano rises and at the end marks + 0.7%. Well Wall Street that at the close of the European markets sees the Dow Jones rise by 1.7 and the Nasdaq by 1%.
In a scenario that changes from hour to hour, it was the raw materials sector, energy above all, the protagonist of the moment. The incessant Russian offensive that has increasingly in its sights civilian targets sparked a commodity rush. The index Bloomberg which traces the trend of commodities soars to the maximum, after having lined up the strongest race since 2009.
The price of the Petroleum rises to $ 110 after OPEC + ‘s decision to confirm its strategy of gradually increasing production with an increase in sales of 400,000 barrels in April, as expected, after noting that the current fundamentals of the oil market and the consensus on its prospects indicate a well-balanced market and that the current volatility is not caused by changes in market fundamentals but by current geopolitical developments “. At the end of EU trading, WTI barrel futures are at 107.9 dollars and Brent futures are in the 110 area, below the daily highs. Tension skyrocketing for the gas which pushes towards unprecedented price peaks: on the Amsterdam stock exchange, gas futures in April reached the intraday record of 194 euros per megawatt hour, before falling back to the current 168 euros. The previous peak at the end of the session was recorded last February 24 at 132.7 euros.
Not only oil and gas prices fly: on the Chicago Stock Exchange, the Chicago Board of Trade (Cbot), the future on the most jumped to its highest since 2013 (+ 1.79% to $ 738). The future is still running on the grain arrived over 10 dollars per bushel, that is the bushel, the international unit of measurement which in the case of wheat is equal to about 27.2 kilograms.
Investors shift their capital from the stock market to the safer stock market. And they are betting that central banks’ monetary tightening will be slower than expected, even though inflation is continuing to gallop. Indeed, the danger mentioned in the reports of the investment banks is precisely that of stagflazione: price run (today Eurostat has set a record), without overall economic growth. Today’s data from the Eurozone puts the bets on accommodating central banks in doubt, in fact spread returns to rise after yesterday’s declines: it reaches 151 points at the end, with the yield at 1.54%: below the session highs but above 147 on the eve of the day. To keep the bar straight, as mentioned, is Jerome Powell, the Fed governor, according to whom “a lot of uncertainty” comes from Ukraine but the rate hike in March remains “appropriate”: “We expect it will be deemed appropriate to raise the Fed Funds rate at our meeting scheduled for this. month, “he said at the House hearing.
Finally, on the foreign exchange market theeuro closed down below $ 1.11. The single currency is trading at 1.1083 on the greenback, after falling today as low as 1.1059 dollars, its lowest since May 2020. Euro / yen up to 128.15, as well as dollar / yen at 115.63 . The ruble remains under pressure in the wake of the sanctions imposed by the West on Moscow and is trading at 111.29 after dropping to 120 earlier in the week.
In Asia, the Tokyowhich had so far passed the crisis unscathed, recorded a sharp decline, following the heavy contraction of the US stock indices: the Nikkei fell by 1.68%, to 26,393.03, losing over 450 points.
Sanctions and counter-moves
Meanwhile, new news is added on the front of the financial war between Moscow and the West. The Russian bank Sberbanksanctioned by the EU but spared from lock on the Swift circuit, has decided to leave the European market. In a statement, he said that “he is no longer able to provide liquidity to European branches, but his level of capital and the quality of assets are still sufficient to make payments to all depositors”. The same ECB officials had anticipated that the Austrian branch of the largest Russian bank would be liquidated after coming under pressure from Western sanctions with “normal insolvency procedures”, while the branches in Croatia and Slovenia were sold to local banks. Thus the depositors of the Austrian branch would be protected up to € 100,000, in line with European legislation, while those in Croatia and Slovenia would be covered “without limits”. Instead the Russian steel giant Severstalby Aleksei Mordashov finished in blacklist of European sanctionshas “completely suspended” the export of steel products to the EU, writes the Russian press.
The limits of sanctions
by Tito Boeri and Roberto Perotti
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While institutions struggle to access the capital market, Putin signed a decree banning bringing more than $ 10,000 worth of foreign currency in cash and “monetary instruments” out of Russia. It is yet another attempt to try to defend foreign exchange reserves, after the G7 countries froze those held by the Russian central bank (it is estimated that more than half of the 630 billion it had before the conflict). Other measures ordered by Putin this week include a requirement for Russian exporters to sell 80% of their foreign currency earnings, a ban on Russian residents from providing non-residents with foreign currency as part of loan agreements and deposit foreign currency in foreign bank accounts.
In a morning report by Unicredit notes how Western sanctions begin to present the bill in Moscow, with Asian banks reluctant to work with Russian counterparts for fear of sanctions. “The export of raw materials is starting to suffer”, say the analysts who cite the case of a major international trader of raw materials (it is Trafigura Group) that failed to place a cargo of Urals crude, the Russian reference, at a great discount on Brent (-18.6 dollars a barrel, a record), despite the fact that there were no Russian banks directly involved in the transaction. The risks associated with industrial operations with Russia have become too strong for the owners of tanker fleets, not to mention the jump in logistics costs to connect to that part of the world. “70% of Russian crude oil trade is frozen,” consultancy Energy Aspects said in a statement. “Many big oil companies do not touch it and only a few European refineries and trading companies are still active on the market”.
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