The regional Stoxx Europe 600 switched between gains and losses in morning trading after a sharp decline in the previous session, as investors balanced the potential for economic consequences of the crisis with that of central banks to reverse previous signals that they are ready to end the pandemic. support.
Hong Kong’s Hang Seng index fell 1.8 percent, while futures contracts tracking the S&P 500 index on Wall Street added 0.8 percent.
Brent crude, the international benchmark, rose 5.9 percent to $ 111 a barrel after US President Joe Biden declared Russia isolated from the world and hinted at new economic sanctions.
Meanwhile, European natural gas prices have reached record highs. Futures related to TTF, Europe’s wholesale natural gas price, rose more than 50 percent to 185 euros per megawatt-hour before cutting its profits to 146 euros.
Sanctions imposed on Russia by Western countries have so far sought to evade the energy sector, but have nevertheless caused instability in global markets due to fears of supply disruptions.
“Brent crude oil is the biggest factor in fears for stock markets,” said Martin Gerdinck, head of European equities at Dutch investment firm NN Partners. “If it becomes ballistic and moves to $ 150 or more per barrel, then [economic] growth is really slowing down. ”
But Ross Mayfield, an investment strategist at Baird, said: “The war has a sense of risk aversion, but it could also put the Federal Reserve and other central banks on a less aggressive path of tightening.
Yields on the German reference 10-year Bund rose 0.03 percentage points to minus 0.04 percent. This was followed by a sharp rise in US, UK and eurozone government bonds on Tuesday as derivatives markets began to price at a much slower pace than central banks, which were expected to emerge from monetary support from the pandemic era. with a series of interest rate hikes.
Yields on 10-year US government bonds rose 0.02 percentage points to 1.73%. This debt yield, which is at the heart of global borrowing costs, fell by almost 0.1 percentage point on Tuesday and returned to levels last seen in January, before Fed Chairman Jay Powell prepared financial markets for the series from aggressive interest rate hikes.
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