US stock markets trended lower ahead of a long weekend amid tensions in Ukraine. Anyone who had hoped for a counter-reaction after the heavy losses of the previous day was disappointed.
The leading index Dow Jones ended trading at 34,079 points, a discount of 0.68 percent. The market-wide S&P 500 index also fell and closed 0.72 percent lighter at 4348 points.
The technology exchange Nasdaq, which had lost almost three percent the day before, again fell disproportionately by 1.23 percent to 13,548 points. The same applies to the Nasdaq 100 selection index, which fell 1.14 percent to 14,009 points.
Ukraine conflict weighs on the market
Given the uncertainty and because there will be no trading in the US on Monday because of the Washington's Birthday holiday, investors did not want to take any major risks, said portfolio manager Robert Pavlik of wealth manager Dakota Wealth: "Nobody wants to go into the long weekend too exposed. "
In addition, US investors are expecting an interest rate hike by the Federal Reserve (Fed) in March, although the extent of this is a mystery. Quite a few even expect an increase of 50 basis points as a first step. Analysis departments of the big banks are currently outdoing each other with forecasts of how many interest rate hikes are imminent, which also does not help to calm things down.
government bonds in demand
In view of the Ukraine crisis, however, investors sought refuge in government bonds. In contrast, the yield on ten-year US bonds fell to 1.918 percent, while the Bund yield fell five basis points to 0.18 percent. Experts point to reports of evacuation from rebel areas in eastern Ukraine. "It makes it a little more real and more likely that there will be a conflict," says market strategist Lou Brien of trading house DRW Trading.
ECB interest rate hike later this year?
According to circles, meanwhile, more and more members of the European Central Bank (ECB) are in favor of raising interest rates this year. An agreement is emerging that bond purchases under the general purchase program APP could be phased out in September, the Bloomberg news agency reported, citing those who were informed. This could mean that the first rate hike will take place in December. However, the report did not weigh on bonds. After all, ECB President Christine Lagarde recently no longer ruled out a rate hike this year.
DAX turns even more negative
Ukraine crisis and no end
Russia's President Vladimir Putin also stated that the situation in eastern Ukraine had deteriorated. Before that, slight signs of relaxation at the diplomatic level had supported the DAX. In early business, the index marked its daily high at 15,317 points.
"The Ukraine conflict is hanging like a gray cloud over the stock markets," wrote Ulrich Kater, chief economist at Dekabank. The recent price fluctuations on the financial markets are due to the economic risks of an escalation of the situation. Military action by Russia would result in economic sanctions.
Western leaders such as French President Emmanuel Macron and US Secretary of State Antony Blinken have expressed concern. Blinken had previously agreed to a meeting with his Russian colleague Sergey Lavrov, giving hope to investors. That meeting is scheduled to take place late next week, provided Russia does not invade Ukraine. "The back and forth that constitutes political exchanges is likely to continue for a while," said Jochen Stanzl, market analyst at broker CMC Markets.
Calm before the storm in the oil market?
At the end of the week, the prices for the North Sea variety Brent and the US variety West Texas Intermediate (WTI) fell, but have detached themselves significantly from their daily lows. However, all investors should be aware that the decline is only a snapshot. Should the Ukraine crisis escalate, the relaxation on the oil market and on the stock markets should soon be over.
In return, after years of dispute over Iran's nuclear program, according to EU circles, a solution seems within reach. "I expect an agreement in the coming week, in the next two weeks or so," said a senior official from the European Union. Opec member Iran could then return to the market, which would increase supply and depress the price.
Gold has to lose its feathers
euros are falling
The common currency is currently suffering from the interest rate advance of the USA, but also from the crisis situation, in which the dollar is traditionally sought after as the world's leading currency. The European Central Bank set the reference rate at 1.1354 (Thursday: 1.1370) dollars.
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