Wall Street in bright red with the war in Ukraine

The actions fell sharply with the intensification of Russian army attacks on major Ukrainian cities and on the Zaporizhzhia nuclear power plant. Investor anxiety is greatly increased. In return, European countries and the United States have imposed an increasingly stringent set of economic and financial sanctions, including Russia’s exclusion from the SWIFT international settlement system. Russia’s 640 billion dollar reserves are also frozen. These countermeasures already have an impact on the Russian economy. According to Energy InformationRussia’s oil exports have thus fallen by at least a third of their volume this week, or about 2.5 million barrels, although German Economy Minister Robert Habeck has announced that he will not support initiatives aimed at prohibit the importation of oil. , Russian gas and coal.

In Moscow, the stock market remained closed all week. As a result of this unprecedented situation, the New York Stock Exchange on Friday stopped trading in three ETFs that were exposed to Russian stocks.

In this unfortunate context, the significant improvement in the American job market has not been noticed. But the US economy added 678,000 jobs last month as wage growth slowed. Wall Street was expecting a figure of 440,000 jobs.

So the S&P 500 ended the week in the red. It loses -1.27% (-9.18% from 12/31/2021) and the Nasdaq gives up -2.78% (-14.90% from 12/31/2021). Conversely, the volatility index, VIX, although already at a very high level at the end of February, closed up 16% on the 32 mark. Not surprisingly, the European indices outperformed American peers. The MSCI EMU fell -10.26%, resulting in a cumulative loss of -17.26% from 12/31/2021. Its FTSE fell -6.71% (-5.38% from 12/31/2021). Asian markets followed the same trend, albeit with less prominence. The Nikkei slipped -1.85% (-9.75% from 12/31/2021) and the Shanghai Composite fell -0.11% (-5.28% from 12/31/2021).

Investors are in favor of the energy and defense sectors

The rise in the Russian-Ukrainian conflict has caused a jump in all raw materials (oil, gas, metals, cereals), which raises fears of the risk of destabilization in countries heavily dependent on imports of the latter. WTI crude oil rose more than 26% during the week, topping $ 115 a barrel for the first time since 2008, despite an announcement by International Energy Agency members to release 60 million barrels from strategic reserves. The energy sector grew by + 9.26%. With the growing appetite for risk, investors turned to protective sectors such as utilities (+ 4.78%), real estate (+ 1.72%), and healthcare (+ 1.17%).

Conversely, financial stocks were heavily penalized (-4.87%) for falling government bond yields. Several other sectors have pulled down the broad market. Information technologies lost -3.01% despite the favorable trend in rates. Once again Netflix (-7.44%) and FB Meta-Platforms (-4.95%) dominated communications services (-2.67%). Both titles have lost almost 40% since the beginning of the year. Consumer intermediates also fell (-2.63%), in the crowd of Amazon stock (-5.30%).

Cash premium and safe haven

The yield on the American 10-year T note fell back + 1.72%. Similarly the German Bund territory returned to a negative territory (-0.07%), losing 30 basis points in five days.

Eight weeks of direct losses ended with a modest gain of + 0.07% with US corporate bonds at an investment rate. However, the trend reversal for this asset class was more pronounced in Europe (+ 1.58%). On the other hand, the flight to high-yield securities outperformed penalty (-0.53% in Europe and -0.13% across the Atlantic). Emerging debt (-4.43% in local currencies) fell following the rise in commodities and the strengthening of the backlog (dollar index up + 1.97%), which plays its full role as a safe haven. So the EUR-USD pair fell below 1.10 (-4.30% in weekly variation). Finally, the gold is shining brightly, now approaching $ 2,000 once (+ 4.31%, of course present $ 1,970.70). The yellow metal attracts investors scared by the Ukrainian chaos.

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