NEW YORK: Stocks around the world were rebounding on Friday and US Treasuries were selling off as investors welcomed coordinated Western sanctions on Russia that targeted its banks but did not block it from a global payments system and left its energy sector largely untouched.
European shares rallied while in the US the S&P and the Dow were slightly higher after a rally on Thursday. However, indices were still down significantly from where they were at the end of last week.
“Looking back, we see that markets have tended to fade geopolitical risks quickly, but even then this looks like a very quick fade,” said Salman Ahmad, global head of macro at Fidelity International. Ahmad said the West’s decision not to lock Russia out of the SWIFT interbank payments system was a “relief to markets that actual black swan disruption likelihood is low”.
Russian stocks recovered to rise about 20pc after Thursday’s record 33pc drop.
Reflecting the relative calm in financial markets, yields on 10-year US Treasuries steadied after a slide to 1.846pc in the previous day’s session. After some dramatic moves in foreign exchange markets on Thursday, currency prices were much calmer.
The US dollar dipped a day after notching its biggest one-day percentage gain in more than three months.
The US dollar index, which measures the greenback against a basket of major currencies, fell 0.361pc while the euro was up 0.45pc at $1.1241.
US economic data showed consumer spending increased more than expected in January even as price pressures mounted, with annual inflation hitting rates last seen four decades ago.
The Russian rouble strengthened to 82.00 per dollar, clawing back from the previous session’s record low of 89.986.
The Dow Jones Industrial Average was up 1.5pc after closing 0.28pc higher on Thursday while the S&P 500 gained 1.32pc after rising 1.5pc in the previous day’s session and the Nasdaq Composite added 0.62pc after rallying 3.3pc on Thursday.
Asian shares had closed higher, with MSCI’s broadest index of Asia-Pacific shares outside Japan adding 0.82pc.
Published in Dawn, February 26th, 2022
