Company / Analytics

Week 07 in Brief

North America

U.S. stocks closed lower Friday, with major benchmarks booking a second week of losses, as investors monitored developments on the growing tensions between Russia and Ukraine amid fears of a war breaking out

How did the major indices perform?

• The Dow Jones Industrial Average dropped 232.85 points, or 0.7%, to close at 34,079.18.
• The Nasdaq Composite declined 168.65 points, or 1.2%, to finish at 13,548.07. A so-called death cross crystallized in the index, a bearish chart pattern.
• The S&P 500 Index fell 31.39 points, or 0.7%, to end at 4,348.87, with information technology the worst performer among the index’s 11 sectors.
• For the week, the Dow dropped 1.9%, the S&P 500 fell 1.6% and the Nasdaq declined 1.8%.

What drove the US market?

• Geopolitics: Renewed fears of a Russian invasion of Ukraine and the rest of the world throughout the West continue to impact investor sentiment. Geopolitical events are very challenging to predict, and anxiety continues. Concerns about conflict have intensified after U.S. and NATO officials said evidence on the ground showed Russia had increased troop levels near Ukraine’s borders despite Moscow announcing earlier in the week that some units were pulling back, while Biden has said the probability of an attack in coming days remains high.
• Diplomatic efforts aimed at heading off an invasion remained in focus, with Biden also expected to speak with European leaders. Meanwhile, the U.S. Secretary of State, Antony Blinken, and Russian Foreign Minister Sergei Lavrov are expected to meet late next week, “provided there is no further Russian invasion of Ukraine,” according to news reports. U.S. equity futures had edged up overnight after Lavrov agreed to meet Blinken.
• Addressing the United Nations Security Council on Thursday, U.S. Secretary of State Antony Blinken made an urgent appeal against a Russian invasion after Western leaders rubbished the Kremlin’s claims of a drawback of troops and Ukraine accused pro-Russian separatists of shelling a civilian village.
• Monetary Policy: U.S. stocks were also undermined by the prospect of tighter Federal Reserve monetary policy. Geopolitical tensions haven’t changed analysts’ views on inflation or the prospect for rising rates, which have been core issues for the market. Bets on a sharper Fed interest-rate rise in March eased somewhat in light of the threat of military conflict. Still, investors remained concerned about how markets will cope as fiscal and monetary stimulus ebbs.
• Economic Data: Existing-home sales increased by nearly 7% between December and January, hitting a seasonally-adjusted annual rate of 6.5 million, the National Association of Realtors said Friday. Economists expected the pace of home sales to come in at 6.1 million.
• Separately, an index of leading economic indicators for the U.S. fell 0.3% in January on surging omicron cases, high inflation, and persistent supply-chain disruptions. The decline in the index was the first since last spring. Wall Street had expected a slight increase. Still, U.S. economic growth is expected to remain positive this year but at a slower and more sustainable level.

Which US stocks were in focus Friday?

• The iShares S&P 500 Growth ETF is down around 13.5% this year, while iShares S&P 500 Value ETF has declined about 3.2%. There seems to be more runway for value stocks outside the United States.
• Roku Inc. reported earnings Thursday that topped Wall Street forecasts but fourth-quarter revenue that didn’t. The company also warned of continuing supply-chain disruptions. Shares fell about 22.3%.
• Shares of DraftKings Inc. dropped 21.6% as the online betting company’s upbeat forecast on profitability in 2023 was overshadowed by a wider-than-expected projected loss in 2022 as competition in online sports gambling intensifies.
• Shares of Ford Motor Co. rose 2.9% amid reports that it is considering separating its electric-vehicle operation from its legacy car and truck manufacturing, a move seen boosting its competitiveness against singularly EV-focused makes such as Tesla Inc., according to a Bloomberg News report Friday. Tesla’s shares fell 2.2%.

How did the European markets perform?

• European markets retreated once again on Friday, with global sentiment hanging in the balance as the Ukraine-Russia crisis reaches a pivotal moment.
• The pan-European Stoxx 600 dropped 0.4% by early afternoon, with travel and leisure stocks shedding 1.6% to lead losses while mining stocks bucked the downward trend to add 0.8%.
• Shares in Germany lead the region with the DAX down 1.47% while London’s FTSE 100 is off 0.32% and France’s CAC 40 is lower by 0.25%.
• In terms of individual share price movement, Finnish pharmaceutical company Orion soared more than 24% after Bayer on Thursday announced positive results from clinical trials of a prostate cancer drug developed by the two companies.
• At the bottom of the European blue-chip index, Swedish heating technology company Nibe Industrier fell 6.8% after its fourth-quarter earnings repo
• On Friday, corporate earnings in Europe came from Allianz, NatWest, and Sika, among others.

How did Asian markets perform?

• Asia-Pacific shares mostly slid overnight as tensions in eastern Europe continued to rattle investors, but selling pressure eased on hopes that a meeting between Blinken and Lavrov next week may yield a diplomatic solution to the standoff.
• The Shanghai Composite rose 0.7% and booked a 0.8% weekly advance. The Hang Seng Index declined 1.9% in Hong Kong for a 2.3% drop for the week. Meanwhile, Japan’s Nikkei 225 fell 0.4% on the session for a 2.1% weekly decline.

Bonds

• The yield on the 10-year Treasury note fell 4.2 basis points Friday to 1.93%. For the week, the yield fell 2.1 basis points. Yields and debt move opposite prices.
• Germany’s 10-year yield declined four basis points to 0.19%
• Britain’s 10-year yield fell nine basis points to 1.38%.

Commodities

• Oil prices ended the week mixed on Friday, with U.S. crude snapping eight weeks of gains, as the prospect of increased Iranian oil exports eclipsed fears of potential supply disruption resulting from the Russia-Ukraine crisis.
• Brent crude futures settled 57 cents, or 0.6%, higher at $93.54 a barrel, while U.S. West Texas Intermediate (WTI) crude ended down 69 cents, or 0.5%, at $91.07 a barrel.
• Both benchmarks hit their highest levels since September 2014 on Monday, but the prospect of easing oil sanctions against Iran has weighed on the market. Brent posted a small 0.9% rise in its ninth straight week of gains, while WTI fell 1.7% this week.
• Gold futures for April delivery slipped 0.1% to settle at $1,899.80 an ounce. For the week, gold rose 3.1% for its biggest weekly rise since May 2021.

Currencies

• The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, edged up 0.3%.
• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.3% to $1.1326
• The British pound fell 0.1% to $1.3599
• The Japanese yen fell 0.1% to 115.10 per dollar
• Bitcoin last fell 1.3% to $40,025.

Next Week

• U equity market is closed on Monday for Presidents Day holiday.
• Market will digest earnings reports from several companies and economic data across the world.