Financial Mirror (Cyprus)

Stocks rebound, oil slips as traders weigh Russia sanctions

- By Roland Jackson

Global stocks rebounded Friday, one day after slumping as Russia invaded Ukraine, while oil declined from 2014 peaks.

In Europe, the three main indices all closed more than three percent higher, recovering most if not all of the previous day’s losses, as Western nations held off from imposing sanctions that would cripple critical sales of Russian oil and gas.

On Wall Street, which ended Thursday in positive territory after the US announced its sanctions package, stocks pushed even further higher.

Asian equities also mostly bounced back. European benchmark Brent crude was down to $96.63 per barrel, having briefly soared past $105 per barrel on Thursday for the first time since 2014.

“It’s a remarkable turnaround when you consider that the invasion is still taking place and sanctions are being drawn up,” said market analyst Craig Erlam at trading platform OANDA.

“With oil trading back below $100 a barrel and gas prices falling after yesterday’s surge, it would appear traders are anticipati­ng minimal disruption to Russian exports either directly as a result of the invasion or from sanctions imposed,” he added.

Sanctions ‘underwhelm­ed’

“The latter is understand­able as the proposed measures so far have underwhelm­ed, to say the least,” said Erlam.

Western nations added to sanctions on senior Russian officials and business figures as well as Russian banks. The US also blocked tech exports including semiconduc­tors. However, Western sanctions have largely spared the Russian energy sector and not cut Russia off from the SWIFT internatio­nal bank transfer system.

“From our vantage point, the rally after the new sanctions were announced suggested to us that the new sanctions weren’t harsh enough, as market participan­ts seemingly took comfort in the recognitio­n that nothing was done to restrict Russia’s oil and gas exports or its access to the SWIFT financial payments system,” said Patrick J. O’Hare at Briefing.com.

Such moves would have sent already high energy prices even higher, causing more pain for consumers.

“The stock market is acting as if it thinks the Russia-Ukraine situation won’t become a source of hyper commodity inflation or the basis for an economical­ly-damaging cyber war,” O’Hare added.

Russian overtures on a diplomatic resolution, even if on harsh terms, also helped sustain the rebound in stocks.

“Today’s recovery was given extra impetus on reports from the Kremlin that Russia was open to sending a peace delegation to Minsk,” said market analyst Michael Hewson at CMC Markets.

“This seems highly odd, given Putin’s commentary this week, but it hasn’t stopped markets hoping that there might be something in it,” he said.

© Agence France-Presse

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