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Volatility continues with more sanctions on Russia, bonds rise, bitcoin surges

stop war

Asia markets are set to open higher following a volatile session on US markets overnight. Risk-off sentiment sent government bonds higher, while stock markets bounced off session lows as investors digest the impact of new sanctions on Russia.

SPI futures are 0.3% up, pointing to a higher open on the S&P/ASX 200, and the NZX 50 is up 0.6%.

US and EU stocks

Major EU stocks finished lower as the Russia-Ukraine conflict continues, with the DAX falling -0.73%, the Euro Stoxx 50 sliding -1.17%, and the CAC 40 declining -1.39%. 

Meanwhile, the three US major indices bounced off session lows and closed mixed. The Dow Jones fell -0.53%, the S&P 500 slid -0.26%%, and Nasdaq was up 0.41%.

Bank stocks deepened losses amid fears that Russian sanctions would hit profit margins, as well as falling bond yields. JP Morgan Chase and Citigroup fell 4.17% and 4.48% respectively. Energy was up on concerns of further disruption to supply.

The defensive stock, Lockheed Martin, was up 4.69% amid Russia’s invasion of Ukraine. The company’s share price has jumped 8.6% since last Friday. Growth stocks were resilient, with Tesla up more than 7.54% and Advanced Micro Devices gaining 1.88%.

Coinbase jumped 7.77% with bitcoin spiking above $41,000. Most of the mega-cap company shares finished higher, with Apple up 0.13% and Microsoft gaining 0.56%.

Treasuries

Government bond yields fell as investors piled into safe-haven assets. The US Treasury 10-year yield fell to 1.84 % from above 1.9% last week. The 2-year Treasury yield slid to 1.44% from above 1.5% a week ago.

Germany’s 10-year bond yield fell to 0.11%, and the France 10-year bond yield slid to 0.57%.

Commodities

The commodity markets are gaining momentum amid the Russia-Ukraine conflict. Precious metals were all holding on their multi-month highs, with gold up 1.2%, silver gaining 2.1%, and palladium surging 5.5%.

Oil futures also kept the upside trend. WTI futures price gained 4.81%, to $96 (USD), and Brent rose 4.25%, to $98.16 (USD).

Forex

The US dollar (USD) spiked initially but cut gains later in the session. Russia's rouble sank 30% against the US dollar to a fresh all-time low, with the interbank banning Russia from the SWIFT system.

Commodity currencies recovered losses amid expectations for strengthening exports prices, with the Australian dollar, New Zealand dollar, and Canadian dollar all up against the greenback. Safe-haven currencies like Swiss franc and Japanese yen also firmed, supported by the risk-off sentiment. The euro cut losses from the early session but finished lower against the dollar.

Cryptocurrencies

The crypto markets rallied on intensifying sanctions on Russia as trading volume in bitcoin surged to the highest since May 2021, in the backdrop of the rouble losing ability in international transactions in the forex markets. The crypto exchange Binance is blocking Russian clients who are targeted by sanctions, but will not stop other accounts in Russia, according to Reuters.

Bitcoin surged 11%, to above $41,600 (USD). Ethereum spiked 8.8%, to above $2,824 (USD).


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