Daily market review

United States

Equities extended Thursday's relief rally on Friday as investors appeared to view the market as oversold, and as many accepted reports that Russia might be willing to conduct high-level diplomatic talks with Ukraine. The Dow Jones industrial average gained 2.5 percent, the S&P 500 rose 2.2 percent and the NASDAQ gained 1.6 percent.

Investors also appeared to accept the suggestion that the Federal Reserve and other central banks would be less aggressive in raising interest rates as a result of economic fallout from the Ukraine conflict. Fed officials have said they are watching the Ukraine situation closely.

Risk appetite benefited as oil prices fell back from recent highs after Western sanctions did not include Russian sales of energy, and as President Biden pledged steps to limit oil price increases. The market also reacted favorably to the relatively limited scope of the new sanctions announced Thursday.

Equity gains were across the board with value outperforming to catch up with Thursday's growth stock rally. Materials showed extra strength, and banks and other financials recovered Thursday's huge losses. Health care, consumer staples, transportation, and consumer discretionary all bounced back. The FANMAG group advanced as traders piled into beaten-down big names.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 9 cents to US$98.91 while spot gold fell US$6.82 to US$1,889.22. The US dollar mostly weakened vs. major currencies but rose vs. the safe-haven yen. Yields on the US Treasury 30-year bond was flat at 2.28 percent and the 10-year note was unchanged at 1.97 percent.


European equities rallied as investors bought the dip, following the example set Thursday on Wall Street, after sanctions on Russia appeared limited, and Russian energy supplies continued flowing to the West. The Europe-wide STOXX 600 gained 3.3 percent, the German DAX rose 3.7 percent, the French CAC advanced 3.6 percent and UK FTSE 100 jumped 3.9 percent.

Risk appetite got a boost from investors hoping that central banks will be slower to push up interest rates in light of the impact of the Ukraine crisis. Markets also responded favorably to headlines suggesting that Russia may be more willing to consider a diplomatic end to the crisis, now that its forces have encircled Kyiv, the capital. Bank stocks, viewed as especially vulnerable to Russia sanctions, were notable winners Friday after plunging Thursday.

All sectors advanced. Best were utilities, basic resources, real estate, banks, and technology, while lagging but still higher were oil & gas, retail, chemicals, and media.

Asia Pacific

Asia/Pacific markets recovered Friday amid bargain hunting in line with the bounce in US markets on Thursday as investors hope the Ukraine conflict will be brief.

China's markets got a boost from an aggressive injection of liquidity from the People's Bank of China, but the rebound was restrained by weakness in energy and real estate stocks. A retreat in oil prices undercut energy stocks. CSI 300 index rose 1.0 percent and the value-stock heavy Shanghai composite firmed 0.6 percent. The Hong Kong Hang Seng index lagged, with a decline of 0.6 percent, as energy stocks weighed on the average. Health care outperformed.

The Taiwan Taiex rose 0.3 percent and the South Korean KOSPI both rose 1.1 percent. Indian equities rebounded with the BSE Sensex rising 2.4 percent.

Japan's Nikkei 225 rose 2.0 percent and the TOPIX was up 1.0 percent. Growth stocks led the recovery with a cue from Wall Street trading where the NASDAQ outperformed as investors saw value after recent steep declines. The rally was limited by caution over the Ukraine situation as the Russian invasion continued.

The Australian All Ordinaries index gave back early strong gains to end up a modest 0.3 percent. Weakness in bank stocks offset strength in technology shares and corporate earnings news proved mixed. Hawkish comments from Federal Reserve Governor Chris Waller, who backed a 100 basis point rate increase by midyear, weighed on risk assets.

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