Global market sentiment was smashed this past week as Russia’s attack on Ukraine stretched beyond the first week. European markets were left particularly vulnerable. It was the worst week for Germany’s DAX 40[1] index since March 2020, falling over 10%. This is as the United Kingdom’s FTSE 100[2] index sank 7.6%, the most in two years.
On Wall Street[3] things were also grim. Futures tracking the Nasdaq[4] 100, S&P 500[5] and Dow Jones fell 2.45%, 1.30% and 1.33%. The VIX Volatility Index, also known as the market’s preferred ‘fear gauge’, closed at a new weekly high, the most since January 2021. Tensions are making life difficult for the Federal Reserve, amplified by this past week’s non-farm payrolls report.
Strong US labor market data, as the nation added more jobs than expected and unemployment declined further, continues to underscore tight conditions. Front-end government bond yields remained elevated as longer-term maturities faded. The 10-year and 2-year yield curve[6] is quickly dropping off a cliff which may hint at rising risks of a recession down the road.
Taking a look at currencies, it was the worst week for EUR/USD[7] (-2.97%) since March 2020. EUR/CHF[8] sank 3.89% in the worst performance since the SNB scrapped the Franc’s peg to the Euro[9] in early 2015. The haven-oriented US Dollar[10] and similarly behaving Japanese Yen[11] outperformed. EUR/JPY[12] tumbled 3.64%, the most since May 2011.
Gold[13] and crude oil prices[14] are also on the rise. The former gained 4.2%, the most since July 2020. This is as WTI soared 25%, the most since May 2020. The
