US stocks rose following choppy trading abroad on Thursday – and oil prices pulled back – as investors watched Western leaders present a unified front against Russia’s invasion of Ukraine.
Technology companies lifted US stock indexes after a sharp fall in the previous session with the tech-heavy Nasdaq Composite up 269.24 points or nearly 2% to 14,191.84.
The Dow Jones Industrial Average rose 349.44 points or about 1% to 34,707.94 and the S&P 500 gained 63.92 points or 1.43% to 4,520.16.
The pan-European STOXX Europe 600 index ticked down 0.2% while the MSCI’s main world stocks index which no longer includes Russian companies gained 0.71%.
Western leaders meeting in Brussels on Thursday agreed to strengthen their forces in Eastern Europe, increase military aid to Ukraine and tighten their sanctions on Russia as Moscow’s assault on its neighbour entered its second month.
As world leaders committed to additional economic pressures, BlackRock Inc chairman Larry Fink said in a letter Thursday to shareholders of his US$10 tril firm that near-global economic and political isolation of Russia by many governments and businesses “has put an end to the globalisation we have experienced over the last three decades”.
The greenback rose for the fourth time in the past five sessions as economic data on the US labour market helped firm expectations that the Fed will be more aggressive in taking steps to curb inflation.
The US dollar index rose 0.15% with the euro down 0.05% to US$1.099.
“The sharp hawkish repricing of Fed rate hike expectations has mainly benefited the US dollar against low yielding currencies whose own domestic central banks are expected to lag well behind the Fed in tightening policy,” MUFG currency analyst Lee Hardman wrote in a note to clients.
US Treasuries resumed their sell-off Thursday, driving bond yields higher, also prodded by the fresh labour market data and pressure on the Fed to hike rates.
The yield on benchmark 10-year Treasury notes was up 4.2 basis points to 2.363%; the two-year US Treasury yield which typically moves in step with interest rate expectations was up 1.3 basis points at 2.126%.
Crude prices slid around 3% on Thursday after the European Union (EU) could not agree on a plan to boycott Russian oil and on reports that exports from Kazakhstan’s Caspian Pipeline Consortium terminal could partially resume.
After rising more than 5% on Wednesday, US crude fell 3.13% to US$111.33/barrel and Brent was at US$118.01, down nearly 3% on the day.
Goldman Sachs market analysts estimated that it would take a sustained oil price increase to US$200/barrel to produce an income shock similar in magnitude to those that precipitated US recessions in the 1970s.
“While we cannot rule out such an outcome, US$200 is considerably above our commodity team’s upside-risk estimate of US$165,” they wrote in a note late on Wednesday.
Gold rose to a more than one-week high on Thursday as concerns over soaring prices and uncertainty surrounding the war in Ukraine lifted bullion’s appeal as a safe-haven and an inflation hedge. Spot gold added 0.9% to US$1,961.43/ounce. – March 25, 2022
