Biden announced measures that target Russia’s sale of sovereign debt abroad
US stock markets closed lower overnight as geopolitical tensions continued to escalate after Russia sent forces into Ukraine’s eastern regions. In turn, Germany decided to halt certification of the North Stream 2 pipeline while the UK imposed sanctions on several Russian banks and individuals. As risk aversion intensified amid these developments, the S&P 500, the Dow Jones, and the Nasdaq fell 1%, 1.4%, and 1.2%, respectively. Of note, the S&P 500 is now more than 10% below its record high registered last month, a drop that is known as a correction.
Asian equity markets, however, managed to rebound on Wednesday, with investors monitoring developments on the geopolitical front after Biden announced measures that target Russia’s sale of sovereign debt abroad. China’s Shanghai Composite was up 0.93%, Hong Kong’s Hang Seng gained 0.60%, South Korean Kospi added 0.47%, and Australia’s ASX 200 rose 0.62%. Japan’s Nikkei was closed for the Emperor’s birthday holiday.
In Europe, stocks opened modestly higher to start the day, as the Eastern countries imposed less harsh sanctions on Moscow than feared. Still, tensions remain elevated after Putin ordered his forces into Ukraine to secure Donetsk and Lugansk rebel republics. London’s benchmark FTSE 100 advanced 0.58%, CAC 40 in France added more than 1% and Germany’s DAX 30 gained 0.82% in early deals. On the data front, the US will release GDP and initial jobless claims later today.
As for currencies, the USD Index still lacks demand as risk sentiment has improved somewhat on Wednesday. The index stays below the 96.00 figure, struggling for direction ahead of the upcoming economic data, with Russia-Ukraine tensions staying in focus. As such, EURUSD retains bullish bias after yesterday’s brief dip below the 1.1300 figure while also struggling to regain the 1.1350 intermediate target on the way to 1.1400.