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Stocks slide, commodities spike as Ukraine war shakes markets

Commodities Mar 04, 2022 04:56PM ET
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3/3 © Reuters. Investors sit in front of a board showing stock information at a brokerage house on the first day of trade in China since the Lunar New Year, in Hangzhou, Zhejiang province, China February 3, 2020. China Daily via REUTERS 2/3

By Herbert Lash

NEW YORK (Reuters) -Data showing a vibrant U.S. jobs market strengthened the dollar and spurred commodity prices higher, but the war in Ukraine overshadowed the blowout report as the euro plunged on the worsening outlook for slower European economic growth.

The U.S. unemployment rate fell to a two-year low of 3.8% as job growth surged in February, a bright spot for an economy that faces mounting headwinds from rising inflation, tighter monetary policy by the Federal Reserve and geopolitical tensions.

The euro tumbled below $1.10 for the first time in almost two years and hit a fresh seven-year low against the safe-haven Swiss franc as Russian forces seized the largest nuclear power plant in Europe and fighting raged elsewhere in Ukraine.

European stocks sank to near one-year lows, with the pan-regional STOXX 600 index sliding 3.56% to increase losses for the week to 7% - its worst weekly decline since the depths of a pandemic-fueled sell-off in March 2020.

The major U.S. stock indices declined less as Europe's dependence on Russian energy and its proximity to Ukraine has slammed the continent more than other parts of the globe.

If it were not for Russia's invasion of Ukraine, the Federal Reserve would likely raise interest rates by 50 basis points at its policy meeting in two weeks, said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

The jobs data is a blowout number but it doesn't ease Fed Chair Jerome Powell's job as he raises interest rates to tame inflation as the economy slows, Kinahan said.

"He has a tough needle to thread here, in terms of making sure that tighter money doesn't upset what's already a very fragile situation," he said.

On Wall Street, the Dow Jones Industrial Average fell 0.53%, the S&P 500 lost 0.79% and the Nasdaq Composite dropped 1.66%.

MSCI's gauge of stocks across the globe closed down 1.65%.

The dollar rose more than 1% against a basket of six trading currencies at one point. A key measure of economic expectations, the gap between yields on two- and 10-year Treasury notes, flattened to under 25 basis points.

A flattening curve can mean investors expect rate hikes soon and are losing confidence in the economic growth outlook.

However, a yield curve that is flat or flattening "isn't necessarily a bad omen for markets," said Jeff Schulze, investment strategist at ClearBridge Investments.

"Given all the uncertainty with the Ukraine situation, the higher inflationary backdrop and some slower global growth as a result, we think that you could see a more dovish Fed than currently is being priced in the financial markets," he said.

A closely watched measure of money-market stress and dollar funding conditions rose to its highest level since May 2020, reflecting the increased risk of banks hoarding the U.S. currency and squeezing liquidity.

European bond yields fell along with the euro as investors worried that higher commodity prices will dent growth in the European Union.

The euro fell 1.17% to $1.0934.

Commodity markets headed to their biggest weekly gains in years as the shuttering of Ukrainian ports and sanctions against Russia sent energy, crop and metal buyers scrambling for replacement supplies.

Crude oil, which has hit its highest level in a decade this week, soared again in a volatile session as the disruption of Russian exports outweighed hopes for more Iranian supply if Washington reaches a nuclear deal with Tehran.

U.S. crude futures posted their biggest weekly gain since April 2020, up 25.9%. U.S. crude settled up $8.01 at $115.668 a barrel, while Brent rose $7.65 to $118.11.

Aluminum touched a fresh record high in London, heading to its biggest weekly gain on record amid fears of a squeeze on the metal from Russia. Nickel reached an 11-year high for similar reasons.

Palladium prices rose above $3,000 per ounce for the first time since May 2021 as concerns over supply shortages from top producer Russia mounted and the war in Ukraine bolstered demand for safe-haven gold.

U.S. gold futures settled 1.6% higher at $1,966.60 an ounce.

Overnight in Asia, MSCI's broadest index of Asia-Pacific shares ex-Japan tumbled as much as 1.5% to 585.6, the lowest level since November 2020, taking the year-to-date losses to 7%.

Stock markets across Asia were in a sea of red, with Japan losing 2.2%, South Korea 1.1%, China 0.9% and Hong Kong 2.5%, while commodities-heavy Australia was down 0.6%.

Stocks slide, commodities spike as Ukraine war shakes markets
 

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Comments (20)
Chris Sundo
Chris Sundo Mar 04, 2022 5:05PM ET
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It's time to end the rule of big oil. Develop alternative energy and hydrogen. South Korea already builds hydrogen-fuelled cars. Hydrogen is split from water.
Maximus Maximus
Maximus Maximus Mar 04, 2022 5:05PM ET
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Maybe the only good thing that will come out of this, when Europe ditches russian oil/gas for good and (partially) replaces it with renewables
Larry Layton
Larry Layton Mar 04, 2022 5:05PM ET
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lol your clothing comes from oil/gas not to mention 5000 other products
Norman Simonow
Norman Simonow Mar 04, 2022 9:16AM ET
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Nuclear powerplant does not explode even if hit by the bomb
Maximus Maximus
Maximus Maximus Mar 04, 2022 9:16AM ET
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If those bombs had damaged the plant’s electrical and cooling systems, there could have been a disastrous meltdown = Chernobyl x 10
Marco cuevas
Marco cuevas Mar 04, 2022 6:32AM ET
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Lol bonds? How long you guus been talking of people.buying up.bonds...oh sure.everyones buying them up for 2% gains..please.
Matt Novakovich
Matt Novakovich Mar 04, 2022 1:14AM ET
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Hollywood plant fire
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Ac Tektrader
Ac Tektrader Mar 04, 2022 1:14AM ET
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matt novakovbitch how's St Petersburg...what do you use for money, I hear they use ruble paper bills for toilet paper now..
Ac Tektrader
Ac Tektrader Mar 04, 2022 1:14AM ET
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John Avenetti ya john avenetti the putin and levrov dog show is getting old.
Erski Gumby
SB20 Mar 04, 2022 1:14AM ET
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John Avenetti With you on the COVID show John, but this ********is real.
Matt Novakovich
Matt Novakovich Mar 04, 2022 1:14AM ET
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Ac Tektrader I'm buying long in all Russian stocks. biggest deal ever in the market
Ac Tektrader
Ac Tektrader Mar 04, 2022 1:14AM ET
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Matt Novakovich Good for you!!!!! I'm sure you'll learn a great lesson....
Ken Roth
Ken Roth Mar 04, 2022 1:00AM ET
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Attack on nuclear plants???? The guy that puts s bullit in Putin head will be a hero to all the world
Ac Tektrader
Ac Tektrader Mar 04, 2022 1:00AM ET
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I hear that's the plan. from here on out, putin his family and inner circle are human targets.. they will never be safe again..... the Ukrainians will make them pay for Russia's genocidal brutality.
jason xx
jason xx Mar 04, 2022 1:00AM ET
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Putins expiration date is rapidly approaching
John Healy
John Healy Mar 04, 2022 1:00AM ET
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Let’s hope so. I know the formal position of the United States is to not assassinate, but in this case we should make an exception. He needs to be permanently removed.
Jussi Puhakka
Jussi Puhakka Mar 04, 2022 12:49AM ET
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Plant on fire? More like car on fire on parking lot.. But any fake news is good way to tank the market
Ac Tektrader
Ac Tektrader Mar 04, 2022 12:49AM ET
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jussi how long have you been covering up Russian war crimes.
Ac Tektrader
Ac Tektrader Mar 04, 2022 12:49AM ET
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just another Russian troll trying to cover up Russian war crimes..
Jussi Puhakka
Jussi Puhakka Mar 04, 2022 12:49AM ET
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Ac Tektrader not covering up. Watching from live stream. I have no need to cover anything as our country is probably next one on the list after ukraine. I just hate this media reactions on these. First casualty of war is truth. Didn't honestly think it would be media who killed it .
Jussi Puhakka
Jussi Puhakka Mar 04, 2022 12:49AM ET
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Ac Tektrader you can join all these telegram groups etc which provide constant coverage on both sides , then make your own assessment from it. But here is prime example. If you want shell/bomb/whatever nuclear plant .. Would you go do it next to reactor .. Or just fire cruise missile from safe distance ? 🤔 also.. Also don't really help russian plans to control crimea if they explode nuclear plant next to it ..
Ac Tektrader
Ac Tektrader Mar 04, 2022 12:49AM ET
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Jussi Puhakka jussi ...the media is just doing their job trying to report what's going on in a war zone they don't always get it right.....the Russian dictatorship owns the media my experience with Russian media has shown they are nothing more than a propaganda arm of the Russian dictatorship and have always covered up their mistakes and corruption. the independent press was giving an honest account of the war, that's why the have threatened an now closed what independent free press Russia had left.
Bhagwan Dass
Bhagwan Dass Mar 04, 2022 12:23AM ET
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Davil Biden ,I have no words for this third class us president.
Ac Tektrader
Ac Tektrader Mar 04, 2022 12:23AM ET
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I have no words for trolls covering up Russian war crimes...
Win Kyaing
Win Kyaing Mar 04, 2022 12:21AM ET
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Chris Sundo
Chris Sundo Mar 04, 2022 12:05AM ET
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200,000 Russian soldiers @ each surrendering of $ 5,000 /soldier = 200k x 5 x 1,000 = $1B. -- If Likely only half the Russian soldiers in Ukraine now would surrender to Ukraine authorities and then be sent to Poland as POW and to collect their reward in Poland's Banking subsidiaries then the payout could amount to only half a billion to settle the whole war and save billions of inconvenience that goes bust now for non-trader investors and governments around the world for aid for Ukraine and nuclear powerplants on fire, etc.
Ac Tektrader
Ac Tektrader Mar 04, 2022 12:05AM ET
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chris sounds good....
Kelly Mayer
Kelly Mayer Mar 04, 2022 12:02AM ET
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Ukraine’s State Emergency Service later issued an update stating that the blaze had actually erupted in a “training building” adjacent to the nuclear site, not the facility’s reactor buildings. While it noted firefighters were initially unable to respond due to the fighting, they were ultimately able to contain the blaze.
Kelly Mayer
Kelly Mayer Mar 04, 2022 12:02AM ET
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The UN’s nuclear watchdog, the International Atomic Energy Agency (IAEA), meanwhile, said that no “essential equipment” had been damaged at the plant, adding that there has been “no change reported in radiation levels,” citing Ukrainian officials.
 
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