After a timid start, the European stock markets are trying to speed up their rebounds and recover the losses they suffered the day before. Statements by Russian President Vladimir Putin, reported by the Reuters agency, about further progress in the talks with Ukraine have encouraged investors to take risks. “There are certain positive changes, negotiators on our side tell me,” the Russian leader said, in a meeting with his Belarusian counterpart, Aleksandr Lukashenko. As traders try to figure out how far the market has priced in the conflict, they remain vigilant against the volatility that continues to fuel the war in both equities and commodities.
The Ibex, which has opened with an advance of 0.54%, shoots its gains to more than 2%, mid-session. Within the selective, Meliá, Bankinter and Sabadell occupy the best positions, while Ree and Repsol are the only ones to fall, although with very slight losses. The other European parks are also advancing in their rally, with increases between 2% and 3% in the case of Frankfurt, Paris and Milan. According to Juan José Fernández Figares, an analyst at Link Securities, although it is normal for strong one-off rallies to occur in a bear market, for the time being the trend in European stocks is downward. “In the short term, only a radical change in the course of the conflict in Ukraine could change this trend in the stock markets,” he adds.
The Moscow stock market remains closed this Friday as well, in what is the longest period of closure of the Moscow stock market, even surpassing that recorded during the economic crisis of 1998, since the last session held in the Russian stock market dates back to last February 25. The price of Brent oil, a reference in Europe, rose slightly after two days of decline and stood at 110 dollars per barrel. The market for inputs remains volatile due to the possibility that Russia will cut its supply, while consuming countries try to diversify their sources of supply. Investors are awaiting the next decisions of the Organization of Petroleum Exporting Countries (OPEC), which will discuss the possibility of increasing its production.
Wall Street futures are trading positive, after closing in red the day before. Asian markets have ended the week with widespread falls, following in the wake of the Americans, who have had to deal with the highest inflation in the last four decades. The Tokyo Nikkei fell 2%, while the Hong Kong index fell 1%.
The evolution of the conflict in Eastern Europe for the moment prevails over the maneuvers of the central banks in their economic policy, which on the eve have cooled the movements of the market. The unexpected announcement by the ECB to expedite the end of massive debt purchases has shown a more hawkish attitude than investors expected. Although the president of the main European monetary authority, Christine Lagarde, has admitted that the war in Ukraine will impact the EU economies by exacerbating the inflationary spiral, she has opted to continue with the reduction of monetary policy measures. “The biggest risk is inflation. Although central banks are rushing to tighten monetary policy already in the first part of the year, looking beyond that, they may struggle if growth really starts to take a hit,” Fiona Cincotta, senior market analyst at City Index, told Bloomberg. . For its part, the Eurobank is not in a hurry to raise interest rates —unlike the Federal Reserve, which is expected to do so next week—, and has opened the door to a gradual rise in the last quarter of the year, once the the purchase program.
The eyes of investors are still on the European summit in Versailles, in which the EU leaders are discussing the measures to put on the table to increase spending on defense and energy and thus reduce dependence on Russian inputs . As in the pandemic, the war in Ukraine forces the Old Continent to think outside the box and make historic decisions to redesign the architecture of its economy. However, when each country emphasizes its own interest, reaching an agreement can be more complicated than expected. France has proposed that the new military spending be financed, such as the recovery plan after the covid crisis, with common debt, an initiative that has not found favor with countries such as Germany and the Netherlands. On the other hand, cooperation has been felt when it comes to ruling out a rapid accession of Kiev to the EU, since to carry out this procedure there are protocols and treaties to respect.
He knows in depth all the sides of the coin.