Global shares fall as Russian troops gain ground in Ukraine – Economy – War in Ukraine
A forex trader walks near screens showing exchange rates at a foreign exchange trading floor in Seoul, South Korea, Friday, March 4, 2022. AP
Stock indices fell in Europe and Asia and US futures fell slightly.
Russian forces gained ground, bombing Europe’s largest nuclear power plant and setting a fire early Friday as they continued their attack on a crucial Ukrainian energy-producing city.
But authorities said the fire was safely extinguished with no casualties. US Energy Secretary Jennifer Granholm tweeted that the reactors at the Zaporizhzhia power plant were protected by sturdy containment structures and were shut down safely.
The German DAX lost 1.4% to 13,493.83 and the CAC 40 in Paris fell 1.6% to 6,278.15. Britain’s FTSE 100 fell 1.5% to 7,128.24.
On Wall Street, the future of the benchmark S&P 500 was 0.5% lower and the future of the Dow Jones Industrial Average was down 0.4%.
The S&P 500 fell 0.5% on Thursday, the Dow fell 0.3% and the tech-heavy Nasdaq fell 1.6%.
China was preparing to open the annual session of its largely ceremonial legislature on Saturday, with the focus likely on boosting growth in the world’s second-largest economy.
In Asian trading, Tokyo’s Nikkei 225 fell 2.2% to 25,985.47 while Hong Kong’s Hang Seng slipped 2.5% to 21,905.29. In Seoul, the Kospi fell 1.2% to 2,713.43. The Shanghai Composite lost 1% to 3,447.65.
Australia’s S&P/ASX 200 fell 0.6% to 7,110.80.
Major indexes are poised for weekly losses as bond yields were mostly flat in the meantime. The 10-year Treasury yield slipped to 1.79% on Friday from 1.85% on Thursday evening.
Stocks rallied midweek after Federal Reserve Chairman Jerome Powell said he favored a modest interest rate hike at a policy meeting later this month. That reassured investors who feared he would support more aggressive measures to fight inflation.
Powell warned on Thursday that the fighting in Ukraine is likely to further amplify the high inflation that is troubling global economies. Russia is a major oil producer and prices have risen as global supplies are threatened by the conflict, raising fears that persistent inflation could get even higher.
Global supply chains have already been disrupted by the pandemic and the conflict in Ukraine will have repercussions far beyond Europe, Tim Uy of Moody’s Analytics said in a report.
“The United States, for example, is not dependent on direct energy imports from Russia or Ukraine, but has significant indirect energy exposure through the goods and services it imports from Europe and Asia and which are produced using Russian energy”. says the report.
The Fed and other central banks face the high-risk challenge of raising interest rates enough to ease price pressures without triggering another recession.
‘For a world that was already struggling with worrying (cost-push) inflation before Ukraine’s invasion, soaring commodity prices due to geopolitical fallout are not just an inconvenience, but rather a constraining economic threat,” Mizuho Bank said in a comment.
Early Friday, benchmark U.S. crude rose 74 cents to $108.41 a barrel in electronic trading on the New York Mercantile Exchange. It lost $2.93 to $107.67 a barrel on Thursday.
Brent crude, the international price standard, added 40 cents to $110.86.
Trading on the Moscow Stock Exchange was expected to remain closed on Friday. The Russian ruble has lost around 5% against the US dollar and is worth less than 1 cent. It has plunged since Western governments imposed sanctions that cut off much of Russia’s access to the global financial system.
Investors will get an update on the US jobs market on Friday when the Labor Department releases its report for February.
In currency trading, the US dollar bought 115.38 Japanese yen, down from 115.47 on Thursday. The Euro weakened to $1.1014 from $1.1066.