Western stock markets in reserve, assessing the economic risk of conflict

Western stock markets on Thursday preferred caution after rising in previous days, the conflict between Ukraine and Russia still attracted their attention. After opening in the red, the New York Stock Exchange was in positive territory. Around 1410 GMT, the Dow Jones added 0.02%, the S&P 500 added 0.22% and the Nasdaq added 0.38%. Europe developed in a dispersed order: after strong growth the day before, Paris gained 0.14%, London 0.70%, but Frankfurt fell 0.56% and Milan 1.11%.

The war in Ukraine continues to worry markets as they try to anticipate its impact on the global economy. The mood is pessimistic after the latest statements regarding the talks between Russia and Ukraine: a Kremlin spokesman said on Thursday that the Russian delegation “made great efforts“, and accused the Ukrainians of “not show the same zeal“. On Wednesday, discussions around “compromise“which would make Ukraine a neutral country along the lines of Sweden and Austria, helped stock markets to progress, despite the rejection of such a model by the Ukrainian negotiator.

The situation spurred oil prices, which rose by more than 7%. The sharp rise in energy prices due to the conflict threatens all sectors of the economy and increases the cost of doing business. The OECD has warned that the war could cost global growth one point a year if its impact on energy and financial markets is prolonged, and could push inflation up to another 2.5 points.

The US Federal Reserve (Fed) currently expects US gross domestic product (GDP) to grow by 2.8% in 2022, compared to 4.0% previously. As for consumer prices, the Fed expects them to rise by 4.3% this year, which is almost double the last December forecast. That inflation, which the Fed says is too high, pushed the monetary institution on Wednesday to raise key rates for the first time since 2018. This maneuver could be repeated six times this year.

All of these elements combined make markets wary of a slowdown in economic growth. “Inflation“And”Inflation expectations will continue to weigh more on Fed officials than downside risks.confirms Allison Boxer, economist at Pimco. The Bank of England (BoE) also raised interest rates on Thursday to 0.75%, pre-pandemic levels, to counter inflation, which it said could top 8% in 2022.

Oil and gas on the rise

Around 1505 GMT, a barrel of North Sea Brent oil for May delivery rose 7.19% to $105.11, while U.S. April WTI rose 7.42% to $102.02.

On the stock markets, oil companies Eni (+1.43%) in Milan, BP (+2.12%) in London or Exxon Mobil (+1.16%) in New York took advantage of this trend.

According to Bloomberg, the European benchmark contract for natural gas rose by 8% after the reduction of Russian gas supplies to Germany.

ThyssenKrupp weakened by Ukraine

The German conglomerate fell 9.34% after warning that the aftermath of the war in Ukraine made “it is impossible to assert the possibilityof their project to make their steel division independent, even if the groupstay convinced” this “offers very good prospects for the future“.

The most Russian-affected stocks were hit, with Renault (-5.25%) at the bottom of the list in France, as were European banks Unicredit (-5.92%) and Raiffeisen (-6.12%).

Delivery continues

Food delivery platform Deliveroo increased revenue in 2021 but widened the deficit due to a surge in costs. The share took 6.52%. In Frankfurt, Delivery Hero gained 0.67%.

On the currency side

In the foreign exchange market, the euro rose 0.33% against the US dollar to $1.1070, while the pound lost 0.25% against the US currency to $1.3117 after the decision of the Bank of England. Bitcoin was stable (-0.30%) at $41,140.

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