Stocks climbed Friday, crude oil rose and U.S. equity futures fell as the Ukraine conflict and Western sanctions on Russia muddied the outlook for markets and the global economic recovery.
An Asia-Pacific share gauge advanced the most in over a week, aided by the technology sector as well as China, where the central bank boosted liquidity.
Tech led a turnaround in U.S. equities Thursday that left the S&P 500 with a 1.5% gain and the Nasdaq 100 — which briefly fell into a bear market — up 3.4%. But U.S. futures have slipped in a sign of lingering investor caution.
President Joe Biden imposed stiffer penalties on Russia, whose forces have pushed closer to Ukraine’s capital, Kyiv, in one of Europe’s worst security crises since World War II.
The sanctions included action against five major Russian banks to impair their access to foreign currency. The measures stopped short of barring the nation from the Swift international payment network, however, and have spared Russian crude supplies.
Oil advanced, taking Brent back above $100 a barrel. Treasuries were mixed, while bonds in Australia and New Zealand declined. The dollar was steady. Gold was around $1,910 an ounce after slipping from a 17-month peak.
Investors are considering the possible inflation and growth shocks to the global economy from the conflict and ensuing sanctions. Russia and Ukraine are major grain exporters, while Russia is also rich in energy and metals. Disruptions could stoke already-high price pressures just as the Federal Reserve prepares to tighten policy.
Biden’s announcement leaves markets “looking at some additional sanctions being added, but certainly not as bad as it possibly could have been,” Emily Weis, macro strategist at State Street Corp., said on Bloomberg Television. That contributed to the Wall Street “risk rally,” she added.
In the latest Fed commentary, Governor Christopher Waller said a half percentage-point increase in U.S. interest rates next month’s lift-off could be justified if economic data keep coming in hot, though the Ukraine conflict has added uncertainty to his outlook.
His comments chimed with other Fed officials acknowledging the risks posed by Russia’s invasion of Ukraine, while stressing the need to confront the hottest inflation in 40 years.
Money-market traders have pared back slightly their expectations for central bank hikes this year, but they still see around six quarter-point increases.
“How is the Fed going to react to this geopolitical risk?” Frances Stacy, director of strategy at Optimal Capital Advisors, said on Bloomberg Television. “That’s where we’re seeing spikes, where we start to try and reprice speculation around that.”
Russian assets nosedived Thursday, spurring emergency action from the country’s central bank. Almost $200 billion in stock-market value was wiped out, and roughly a third of the sovereign debt’s value.
