Tech and banks lead Wall Street rebound
A late update: Wall Street drove the global rally onwards, with its best day in around 21 months.
The S&P 500 index of US company stocks has closed 2.5% higher at 4,277 points, up 107 points. That’s its biggest one-day percentage gain since June 2020, with financial stocks and tech firms rebounding.
Stocks posted sharp gains on Wednesday as recently surging commodity prices, especially oil, cooled off while the war in Ukraine continues.
— CNBC (@CNBC) March 9, 2022
The Dow rallied 2%.
The S&P 500 rose 2.57%.
The Nasdaq surged 3.59%. https://t.co/vAHfBqgy3c pic.twitter.com/EY7fXyBjZk
That’s quite a rebound, after New York saw its biggest drop in over a year on Monday:
Kyle Rodda of says:
Narrative. Flow. Technicals. Sentiment. In the short-run, markets are always driven by these factors more than anything else. In a highly uncertain and volatile environment, this fact only becomes more relevant. For these reasons, it’s why we saw what was the biggest one day rally in US stocks since June 2020.
The key headline sparking it all were reports that Ukrainian President Volodymyr Zelensky is willing to commit to political neutrality – that is, not getting into bed with NATO in any way -- in exchange for a respect of existing Ukrainian borders. If this seems like a possibly trivial and ineffectual commitment, and one that has been effectively made prior to this point, that’s because it is, and has been.
However, last night it capture the hearts of market participants, setting of a relief rally in equities and the Euro, and a drop in the major invasion trades in oil and gold, with the shift in sentiment setting off a short-term technical reversal as flows moved in the opposite direction to the prevailing trends.
Shares were also boosted by the sharp fall in oil prices on Wednesday, with US crude plunging 12%.
Oil’s fall followed reports that the United Arab Emirates could favour an increase in output by Opec, to address market turmoil.
However... energy minister, Suhail al-Mazrouei, has now tweeted that the UAE is committed to the existing OPEC+ schedule of production increases, saying:
“The UAE believes in the value OPEC+ brings to the oil market”
The UAE believes in the value OPEC+ brings to the oil market.
— سهيل المزروعي (@HESuhail) March 9, 2022
The UAE is committed to the OPEC+ agreement and its existing monthly production adjustment mechanism.
UAE believes in increasing OPEC production (which, btw, OPEC is already going to do according to its current arrangement), but it's also committed to the OPEC+ alignment with Russia and the group's unity.
— Gregory Brew (@gbrew24) March 9, 2022
Transition: don't count on UAE pushing for higher output in April.#OOTT https://t.co/GchKckey7D
Well, that was quick. Existing monthly increases: so that’s the +400,000 b/d that OPEC+ is bringing (on paper) every month. For now, it doesn’t sound like Abu Dhabi is pressing for a *faster* output path (despite what its US embassy said earlier today) #OOTT https://t.co/eIoExaowZq
— Javier Blas (@JavierBlas) March 9, 2022
Closing post
A recap....
Fitch predicted that the pain of escalating sanctions raised the proospect of at least a ‘selective non-payment’ of its sovereign debt obligations, after the US and the UK both announced bans on Russian oil imports on Tuesday.
Russians are already feeling the economic pain of the crisis. Inflation jumped by over 2% in the first week of the Ukraine war, with consumer prices now 10% higher than a year ago.
With the economy heading into a deep recession, there is clearly much more trouble ahead, with the rouble weakening again this morning.
We forecast Russia will see a massive GDP drop of -15% in 2022. Downside risk to that number is building fast as war escalates. Financial conditions (blue) tightened further from just a few days ago, leaving 2009 in the dust. Russia is on course for unprecedented impoverishment. pic.twitter.com/rSACIeSQtP
— Robin Brooks (@RobinBrooksIIF) March 9, 2022
European stock markets have staged a dramatic rebound today, in their strongest recovery in two years. Germany’s DAX led the way with an 8% gain, as anxiety over the crisis appeared to ease.
In London, banks, travel companies and Russian miners all had a strong day, recovering some of the major losses in the last two weeks.
Oil prices have tumbled, with crude down around 13% tonight on optimism that Opec might boost production. The move has calmed some concerns about inflationary pressures hitting the global economy.
But analysts have cautioned that the markets may be too optimistic, given the air strike on a Children’s hospital in Mariupol today, and Western fears that Vladimir Putin could use chemical weapons on Kyiv.
The EU has added more names to its sanctions list ,including Russian Formula One driver Nikita Mazepin and Russian business leaders.
While the UK government unveiled new aviation sanctions against Russia, toughening up a ban on Russian planes flying or landing in the UK alongside powers to detain any Russian aircraft in the UK.
One private jet has already been seized, and could be linked to billionaire Eugene Shvidler, the close friend and business partner of Roman Abramovich.
The business backlash against Russia gathered more pace, with the owner of KFC and Pizza Hut has joined the ranks of Western brands suspending its operations in Russia.
Kentucky-based Yum! Brands is suspending 70 KFC company-owned restaurants in Russia and finalising an agreement to suspend all 50 Pizza Hut outlets in partnership with its master franchisee.
Mothercare, Heineken and Universal Music Group also announced they were halting operations in Russia.
Tobacco firm Imperial Brands also announced it will halt operations in Russia, but British American Tobacco will continue selling cigarettes in Russia:
While some directors are quitting the boards of Russian firms, others are holding firm:
Fertiliser giant Yara has temporarily cut output at two European plants, due to soaring energy prices.
With fears of food shortages already rising, Irish dairy and beef farmers are being urged to start growing crops. Agriculture ministers from G7 countries including Britain’s George Eustice will meet on Friday to discuss grain shortages and food price volatility amid the war in Ukraine.
Elsewhere, the US labour market remains tight with 11.3m job vacancies at American companies in January.
UK households are the gloomist about financial conditions in a decade, as inflation squeezes incomes.
Also:
Goodnight. GW
