(New York) Wall Street stiffened on Friday after the close of European markets, panicked by the possible imminent invasion of Ukraine by Russia, which weighed on stocks and took off the bond market.
Posted at 10:33 a.m.
Updated at 6:00 p.m.
Earlier, the European indices had continued to fall, as the day before, in order to align with the losses of Wall Street on Thursday. Paris lost 1.27%, Milan 0.82%, Frankfurt 0.42% and London 0.15%.
After European markets closed, a reporter for the US public broadcaster PBS claimed that the US government was convinced that Russian President Vladimir Putin had “decided to invade Ukraine” and had informed the Russian military command of his decision.
The White House denied, through National Security Advisor Jake Sullivan, who nevertheless indicated that there was a “very real possibility” of a Russian attack.
Indices plunged and US bond rates fell sharply.
“News out of Ukraine and Russia has dealt another blow to markets that were already wobbly,” said Cliff Hodge, chief investment officer at Cornerstone Health. “The flight to safe assets has begun. »
After rising to 2.06%, its highest level since the end of July 2019, the ten-year US government bond rate fell sharply, down to 1.91%, as investors rushed on bonds (prices and rates move in opposite directions).
“If an invasion were to occur,” anticipated John Lynch, chief investment officer at Comerica Wealth Management, “it is conceivable that stocks could see another decline of around 10%, with investors selling first and asking more questions. late. »
Among the rare values to float on Friday in New York, oil companies, such as Chevron (+2.04%), ExxonMobil (+2.52%) and Marathon Petroleum (+1.82%), as well as the chemical group Dow ( +0.23%) or the Mosaic mining company (+2.07%).
On the downside, red was everywhere, including among the largest caps on Wall Street, from Apple (-2.02%) to Microsoft (-2.43%), via Meta (Facebook), which took over its slide (-3.74%), which began a little over a week ago.
Fever on oil
Unsurprisingly, oil prices soared, with a barrel of Brent from the North Sea for delivery in April even hitting $95.66, within reach of the psychological threshold of $100.
It finally ended on a jump of 3.31% to 94.44 dollars, the highest since September 2014.
In New York, a barrel of West Texas Intermediate (WTI) for March delivery rose 3.58% to $93.10, also the highest in more than seven years.
The Yen soars, the euro suffers
Judged as the safest currency by traders, the yen jumped 1.73% against the euro, an exceptional difference for the foreign exchange market.
Also considered a safe haven, the Swiss franc also benefited from this cold snap, but less than the yen, due to Switzerland’s “economic proximity” to the countries involved in the crisis, underlined Juan Manuel Herrera, currency specialist at Scotiabank.
Another safe haven, the dollar also advanced against the euro and stood at 1.1349 dollars, up 0.68%.
Often shunned when risk appetite wanes, cryptocurrencies were sold off massively. Bitcoin lost 3.52% to $42,551.70 and Ethereum 6.21%.
Toronto Stock Exchange closes higher
The Toronto Stock Exchange closed higher on Friday, buoyed by gains in the energy sector, as the price of crude oil crossed the US$93 mark.
The major US stock indexes, for their part, fell, victims of fears surrounding future interest rate hikes.
This last volatile session of the week came after high US inflation figures raised the likelihood of aggressive central bank action, while concerns over a possible Russian invasion of Ukraine helped to rattle investors. markets, observed Greg Taylor, chief investment officer at Purpose Investments.
“It’s been a volatile week and it’s still just an extension of the volatile year we’ve had, and that’s really to be expected, because central banks, after being super dovish for two years , now show their teeth. »
US inflation of 7.5% released this week was the highest in 40 years, and it firmed expectations of a rate hike, which put pressure on risky assets, particularly in the technology sector, he explained.
“A lot of things are in play, but it really comes down to bond yields more than anything, but in relative terms, Canada is the winner right now, because of our exposure to cyclical stocks. »
The Toronto floor’s S&P/TSX Composite Index advanced 17.12 points to end the session with 21,548.84 points. The energy sector rose 3.6%, offsetting declines in the information technology, finance and industrials groups.
Suncor Energy shares rose 4.55% and Canadian Natural Energy rose 2.92% as crude oil prices rose US$3.22 to US$93.10 a barrel raw materials from New York.
The Industrials sector was hurt by a 6.35% drop in Magna International’s stock, after the auto parts maker said it was suffering from supply chain constraints and issued an outlook below analysts’ expectations for its 2023 fiscal year. Shopify’s stock meanwhile lost 4.4% amid a broader tech divestment.
In the currency market, the Canadian dollar traded at an average rate of 78.73 cents US, down from 78.85 cents US the previous day.
Statistics Canada is due to release inflation data for January next week, two weeks before the Bank of Canada announces its next monetary policy decision, which is expected to include an interest rate hike.
The Canadian Press