US market: Indices ended lower amid rising Oil prices and Geopolitical concerns
On Monday, US stocks ended mixed while the energy prices soared after an escalation of sanctions against Russia amid an ongoing conflict between Russia and Ukraine. Brent crude oil price increased to a seven-year high at $104 per barrel. The gold prices jumped while treasury yields came lower.
All the major indexes closed lower on Tuesday as the Russian attack intensified on Ukraine and more sanctions were imposed on Russia by the Western countries. The crude oil price continued to slide. Market awaited the Federal Reserve monetary policy update.
After closing lower for two consecutive days, the market rebounded on Wednesday and regained a large part of losses from the previous day. The market took the Monetary policy positively, wherein, the chairman made a statement that the Fed will not opt for an aggressive rate hike in March.
The US market fell on Thursday after the previous day's rally. The crude oil prices jumped to $116 per barrel to reach a more than decade high. Brent crude oil skyrocketed to touch $120 per barrel. The data on the labour market was made available and pointed to a tight labour market, suggesting rising wages will remain an ongoing contributor to inflation.
The US share fell on Friday to close the week on a weak note as investors continued to monitor for global economic fallout from Russia's war in Ukraine. The treasury yields pulled back further as investors continued to invest in gold and bonds.
Let’s see the major developments during the week:
Monetary Policy - The Federal Reserve presented the monetary policy to Congress this week. The Fed also provided clarity on the interest rate hike which the market took positively. The most likely rate hike will be 25 basis points against analysts' fear of 50 basis point hikes. Check our detailed article here.
The war continued its impact on the market - As Russia intensified its attack on Ukraine with the latest developments being a bombing of Europe's largest nuclear power plant in Ukraine. The US and European Union swiftly responded with unprecedented sanctions aimed at crippling the country's ability to maintain the financial system stability and cutting off Russia from participating in the global economy. The market remained volatile because of the situation.
Treasury yields - The risk-off environment due to the Ukraine crisis and Powell’s comments pushed the yield on the benchmark 10-year U.S. Treasury note to its lowest intraday level in two months. The yield on the 2-year note declined 6 bps to 1.48%, the yield on the 10-year note dropped 11 bps to 1.74%, and the 30-year bond rate decreased 7 bps to 2.16%.
The unemployment data - The unemployment rate declined from 4% to 3.8% for February. The underemployment rate - including total unemployed and those employed part-time for economic reasons, along with people who are marginally attached to the labour force—rose to 7.2% from the prior month's 7.1% rate.
Quarterly results - Many companies announced their quarterly results this week, and it was a mixed week in terms of results. Some popular companies that announced results this week are HP, Salesforce, Zoom, Dell, and Snowflake. HP reported strong topline and bottomline, Salesforce numbers were higher than the street estimate, and Zoom disappointed investors with a weaker 2022 outlook.
Crude oil - The crude oil price continued to increase for the second consecutive week. Uncertainties over global crude and natural gas supply have risen amid war in Ukraine and escalating sanctions on Russia. The energy sector performed best, as international oil prices traded as high as nearly $120 per barrel on Thursday a level last seen in 2008 before news of a possible Iran nuclear deal caused them to retreat a bit.