By Peter Nurse
Investing.com — Russian troops continued to advance on Ukraine’s capital Kyiv as Moscow defied new sanctions imposed by Western powers. European stocks rebounded, but Wall Street is expected to open lower ahead of a deluge of economic data that could guide the Federal Reserve at next week’s policy-setting meeting. Crude prices have stabilized as traders digest the new measures. Here’s what you need to know in financial markets on Friday, February 25.
1. Russia defies new sanctions and advances on Kyiv
Russia’s invasion of Ukraine continued on Friday, with its troops advancing on the capital, after President Vladimir Putin declared war on Thursday.
US President Joe Biden reacted Thursday night by announcing broader sanctions aimed at hampering Russia’s ability to do business in the world’s major currencies, as well as sanctions against banks and state-owned companies.
“This is going to impose a significant cost on the Russian economy, both immediately and over time,” Biden said.
The EU joined in by freezing Russian assets in the bloc and blocking its banks’ access to the region’s financial markets, moves that EU foreign policy chief Josep Borrell described as “the most severe sanctions package we have ever implemented”.
However, Ukrainian President Volodymyr Zelenskiy said on Friday that continued Russian aggression showed sanctions were not enough.
He’s probably right, but it’s hard to see what could be done to generate an immediate response from Moscow.
Russia has accumulated more than $600 billion in foreign exchange reserves, up more than 75% since Putin’s annexation of Crimea in 2014, helped by soaring oil and gas prices. Its current account surplus of 5% of annual GDP and a debt-to-GDP ratio of 20% are among the lowest in the world, while only half of Russia’s liabilities are in dollars, down from 80% two decades ago.
2. European stocks up; Goldman lowers Stoxx 600 year-end target
European stock markets are showing some resilience on Friday, trading higher after steep losses in the previous sector.
Investors pumped money into cash and stocks in the week ending Wednesday as stock positioning showed ‘no signs of capitulation’, according to Bank of America’s weekly flow report , released on Friday.
Global equities saw $7 billion move into cash and $6.2 billion in inflows into stocks while investors pulled $3.5 billion out of bonds, the bank said, analyzing EPFR data .
That said, data collection ended on Wednesday, the day before Putin sent Russian troops to its southern neighbor.
Goldman Sachs took a more cautious stance, cutting its year-end target for Europe’s main stock index, the pan-European Stoxx 600, saying stocks in the region are likely to face risk for some time.
The influential US investment bank now expects the index to hit 490, down from the previous 12-month target of 530.
As of 06:10 ET (1110 GMT), the traded up 1.8% at 446.64, after closing at 438.96 on Thursday, falling to a nine-month low following the invasion of Ukraine by Russia.
3. Stocks should open lower; Beyond Meat (NASDAQ:) shares plunge
U.S. stock markets are expected to open lower, returning some of Thursday’s gains as Russian troops close in on Ukraine’s capital, Kyiv.
As of 6:10 a.m. ET, they were down 300 points, or 0.9%, while down 0.9% and down 0.8%.
Wall Street’s major indices staged a stunning comeback on Thursday, plunging at the open after Russia invaded Ukraine before closing sharply higher after President Joe Biden announced new sanctions.
The blue chip finished nearly 100 points, or 0.3%, higher after losing more than 850 points to its session low. Broad base rebounded to close 1.5% higher, while heavy tech rebounded 3.3% after falling nearly 3.5% to the day’s low.
Earnings season is mostly over, but there are still a few companies reporting late to claim the limelight.
Beyond Meat Inc (NASDAQ:) Shares plunged in premarket trading after the fake meat maker released disappointing fourth-quarter numbers, while Coinbase (NASDAQ:) shares are seen falling after the trading platform crypto reported a drop in monthly volumes and users despite the volatility in the trading climate.
4. Deluge of economic data
The Federal Reserve will hold its next policy-setting meeting next week, and data releases later in the session could provide more clues as to whether it will raise short-term rates, and by how much.
and data for January, the month after the holiday season, is due at 8:30 a.m. ET (1:30 p.m. GMT). Analysts expect personal spending to rise 1.6% from the previous month, beating December’s reading of -0.6%, while personal income is expected to fall 0.3%, below the +0s, 3% previously announced.
for January are also due at the same time and are expected to rise 0.8%, after falling 0.7% the previous month, while the , an inflation gauge the Federal Reserve uses in its rate deliberations interest rate, is expected to rise to 5.1% for the year in January.
Many now expect the central bank to hike 50 basis points, given high levels of consumer prices and the strength of the US recovery, but the outbreak of war in Ukraine could prompt the Fed to take a less aggressive stance on rate hikes.
5. Crude stabilizes near $100 a barrel
Crude oil prices stabilized on Friday after volatility in trading on Thursday after Western powers imposed new sanctions on Russia as punishment for its invasion of Ukraine.
Although a US official said the new measures “do not and will not target oil and gas flows”, sanctions against Russian banks and state-owned companies are likely to hamper the country’s ability to do business in major currencies.
Prices jumped above $100 a barrel for the first time since 2014 on Thursday, but sold off later in the session after US President Joe Biden raised the prospect of a release of US oil from its strategic reserves in coordination with other countries.
Also limiting Friday’s gains, Thursday’s oil supply data from the . Released a day later than usual due to Monday’s holiday, it showed a buildup of around 4.5 million barrels in the week to February 18, suggesting a slowdown in demand from the biggest consumer. of energy in the world.
As of 6:15 a.m. ET, U.S. crude futures were down 0.4% at $92.44 a barrel, while down 0.5% at $94.90 a barrel.
were down 0.1% at $2.9130 a gallon.