MARKET REVIEW. The New York Stock Exchange ended a volatile session on Monday in disarray, weighing the impact of harsh Western financial sanctions on Russia, aimed at wresting a ceasefire in Ukraine. The rise in commodity prices stemming from the political uncertainty in Ukraine enabled the Toronto Stock Exchange to close higher on Monday, and even to accumulate a slight gain for the whole of February.
Stock market indices at noon In Toronto, the S&P / TSX collected 20.36 points (+0.10%) to 21,126.36 points.
In New York, the S&P 500 fell 10.71 points (-0.24%) to 4,373.94 points.
The Nasdaq closed up 56.78 points (+0.41%) at 13,751.40 points.
The DOW ended down 166.15 points (-0.49%) at 33,892.60 points.
The loonie fetched US$0.002 (+0.2525%) to US$0.7891.
Oil advanced US$4.22 (+4.61%) to US$95.81.
Gold gained US$25.00 (+1.32%) to US$1,912.60.
Bitcoin gained US$4,373.66 (+11.74%) to US$41,642.63.
The context The session also concluded another month of losses for the indices, after a difficult month of January. The United States announced on Monday that it was crippling the assets of the Central Bank of Russia, carrying out one of the measures decided against Russian banks this weekend with the European Union, joined by Japan and Switzerland.
Initial Russian-Ukrainian talks have taken place in Belarus, and delegations have returned for “consultations in their respective capitals”. The EU has closed its airspace to Russian planes, while Vladimir Putin has banned many airlines from Russian skies. “Uncertainty is high and the outcome is unclear. When it’s like that, there’s a flight to safe assets, like treasuries, cash, gold and precious metals,” commented David Kotok, chief strategist at Cumberland Advisors.
Yields on 10-year Treasuries, which move inversely to the price of bonds that were in high demand, slipped to a one-month low of 1.81%.
The dollar gained almost 0.50% against the euro to US$1.121 per euro as oil prices resumed their ascent.
“The sanctions imposed have been very severe and the market is worried about the economic boomerang that could occur if these sanctions remain in place for a long time,” said Peter Cardillo of Spartan Capital. A large half of the S&P 500 sectors ended in the red, with real estate (-1.77%) and the banking sector (-1.45%) in first place.
“We don’t know how the sanctions will unfold. We know that the method of payment has changed, but we will only know after the fact the link between the payments” and the cascade of unpaid debts that can result from it, explained David Kotok referring to the exclusion of Russian banks from the Swift system. “When you block payments from or to Russia, that payment was already intended to be used for something else. When the payment does not arrive, the next transaction does not take place and the risk of contagion appears,” he warned.
JPMorgan (JPM), Citigroup (C) concluded down more than 4%. Stocks of airlines affected by escalating airspace sanctions also fell more than 3%, including Delta Airlines (DAL) (-3.90% to US$39.92) and United Airlines (UAL) (- 3.16% to US$44.40). Defense stocks were on the rise like Lockheed Martin (LMT) (+6.67% to US$433.80) or Northrop Grumman (NOC) (+7.93% to US$442.14) ).
On the list, Russian companies listed on the NYSE or on the Nasdaq have seen their exchanges stopped pending “additional information” given the Russian-Ukrainian conflict and the scope of the new sanctions. The listing of half a dozen securities including those of the Russian tech giant Yandex or the electronic payments group Qiwi has been halted on the Nasdaq.
On the NYSE, three groups, Cian, a real estate platform, the mining group Mechel (MTL) and the telecommunications group MBT, are concerned. Before this trading stop put in place overnight by the New York market, Russian shares had suffered violently on Friday. Yandex had thus fallen by 44% in one day. After the announcement of its acquisition for 13.4 billion US$ by the Canadian bank Toronto-Dominion Bank (TD.TO), the American First Horizon gained 28.66% to 23.48 US$.