World shares fall as Russian troops gain ground in Ukraine

AP , Friday 4 Mar 2022

World shares declined and oil prices moderated Friday as investors assessed the deepening impact of Russia's invasion of Ukraine.

Financial Market
A currency trader walks near the screens showing the foreign exchange rates at a foreign exchange dealing room in Seoul, South Korea, Friday, March 4, 2022. AP

Stock benchmarks fell in Europe and Asia and U.S. futures edged lower.

Russian forces gained ground, shelling Europe's largest nuclear power plant and sparking a fire early Friday as they pressed their attack on a crucial energy-producing Ukrainian city.

But authorities said the blaze was safely extinguished with no victims. U.S. Energy Secretary Jennifer Granholm tweeted that the Zaporizhzhia plant's reactors were protected by robust containment structures and were being safely shut down.

Germany's DAX lost 1.4% to 13,493.83 and the CAC 40 in Paris gave up 1.6% to 6,278.15. Britain's FTSE 100 declined 1.5% to 7,128.24.

On Wall Street, the future for the benchmark S&P 500 was 0.5% lower and the future for the Dow Jones Industrial Average lost 0.4%.

The S&P 500 fell 0.5% on Thursday, the Dow slid 0.3% and the tech-heavy Nasdaq fell 1.6%.

China was preparing to open the annual session Saturday of its largely ceremonial legislature, with the focus likely to be squarely on boosting growth in the world's second-largest economy.

In Asian trading, Tokyo's Nikkei 225 index fell 2.2% to 25,985.47 while the Hang Seng in Hong Kong slipped 2.5% to 21,905.29. In Seoul, the Kospi declined 1.2% to 2,713.43. The Shanghai Composite index lost 1% to 3,447.65.

Australia's S&P/ASX 200 shed 0.6% to 7,110.80.

Major indexes are on pace for weekly losses, as meanwhile bond yields were mostly steady. The yield on the 10-year Treasury slipped to 1.79% Friday from 1.85% late Thursday.

Stocks had rallied mid-week after Federal Reserve Chair Jerome Powell said he favored a modest interest rate increase at a policy meeting later this month. That reassured investors worried he might back more aggressive moves to fight inflation.

Powell warned Thursday that the fighting in Ukraine is likely to further magnify the high inflation troubling world economies. Russia is a key oil producer and prices have been rising as global supplies are threatened by the conflict, raising concerns that persistent inflation could become even hotter.

Global supply chains already were disrupted by the pandemic and the conflict in Ukraine will have ripple effects way beyond Europe, Tim Uy of Moody's Analytics said in a report.

``The United States, for example, does not rely on direct energy imports from Russia or the Ukraine, but does have significant indirect energy exposure through the goods and services it imports from Europe and Asia that are produced using Russian energy,`` the report said.

The Fed and other central banks face the high-risk challenge in raising interest rates enough to cool price pressures without triggering another recession.

``For a world that was already grappling with worryingly high (cost-push) inflation before Ukraine's invasion, the surge in commodity prices from the geo-political spill-over is not merely an inconvenience, but rather a binding economic threat,'' Mizuho Bank said in a commentary.

Early Friday, U.S. benchmark crude was up 74 cents to $108.41 per barrel in electronic trading on the New York Mercantile Exchange. It lost $2.93 to $107.67 per barrel on Thursday.

Brent crude, the international price standard, added 40 cent to $110.86.

Trading on the Moscow exchange was due to remain closed on Friday. Russia's ruble lost about 5% against the U.S. dollar and is worth less than 1 cent. It has plunged since Western governments imposed sanctions that cut off much of Russia's access to the global financial system.

Investors will get an update on the U.S. jobs market on Friday when the Labor Department releases its report for February.

In currency trading, the U.S. dollar bought 115.38 Japanese yen, down from 115.47 on Thursday. The euro weakened to $1.1014 from $1.1066.

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