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Kinvestor Market Recap: March 4

March 4, 2022

Kinvestor Market Recap: Your Weekly Market Summary for February 28-March 4

This week in global markets was clouded by war, with the Russian invasion of Ukraine entering its second week. Over the past five days, Canadian stocks have seen modest gains, with the TSX Composite Index rising 1.25% since last week’s one month lows. The index’s gains are largely thanks to rising oil and commodity prices, which continue to be a source of uncertainty for investors as the conflict in Ukraine continues to unfold.

By Thursday, U.S. stocks, which initially rose after Wednesday’s rally, saw general losses as the Dow Jones Industrial Average (.DJI) fell 0.29%, the S&P 500 (.SPX) lost 0.53% and the Nasdaq Composite (.IXIC) dropped 1.56%.

With many investors afraid that global sanctions on Russia will disrupt oil shipments from the world’s largest exporter of crude and oil, by Thursday oil prices were set to reach their highest weekly gains since mid-2020. WTI rose over 22% while Brent was up 16% after hitting their strongest gains in a decade this week.

Ultimately, oil proved more volatile than initially expected, with U.S. crude prices settling at $107.67 a barrel, while Brent slipped $2.47 to settle at $110.46.

Aluminum, copper, and nickel prices also hit record highs upon fears that Russia sanctions would hamper the supply of commodities.

Gold also saw gains amidst investor uncertainty as the conflict in Eastern Europe continued to unfold, with the Canadian Dollar spot price rising 0.26% on Thursday to $2,461.30 per ounce after spiking on Wednesday.

According to the United Nations Refugee Agency, over 1 million refugees have fled Ukraine as the war has unfolded across the country. Meanwhile, governments and corporations alike are setting up sanctions against Russia. On February 24, the United States announced that it would implement financial sanctions on Russia’s largest financial institutions, while tech giant Google has halted all online ad sales in Russia.

On Thursday, fire broke out at the Zaporizhzhia nuclear power plant, which supplies over 20% of Ukraine’s electricity and is the largest nuclear power plant in Europe. According to U.S. Energy Secretary Jennifer Granholm, the nuclear reactors at the plant “are protected by robust containment structures and reactors are being safely shut down.” She assured that no elevated radiation readings near the facility have been seen.

Spot price for uranium has remained unchanged despite fears after the nuclear plant attack. The current spot price is US$48.75 per pound as of February 28, 2022. And while uranium stocks are generally down based on the news, countries continue to place a significant emphasis on nuclear energy. The United States has indicated that it will not place sanctions on Russia’s nuclear energy, which could suggest that major countries don’t want to depend on Russia or it’s allies for nuclear in the future.

Early reports of the incident at the power plant sent financial markets in Asia spiralling, with stocks tumbling and oil prices surging further, reported Reuters.

In Canadian economic news, the Bank of Canada announced its policy interest rate for March on Wednesday, increasing the overnight rate to half a percent, up from 0.25%. This represents the first policy rate increase since it was lowered to 0.25% from 0.75% in March 2020, and is part of the Bank’s plan to lower inflation, which reached a record CPI of 5.1% in January – well above the target range of 2%.

The Bank’s decision to increase its policy interest rate was driven by promising GDP growth in the fourth quarter of 2021, which was strong at 6.7%, said Governor Tiff Macklem in his speech on Thursday. Another source of uncertainty, said Governor Macklem, is Russia’s invasion of Ukraine.

“Tighter monetary policy is necessary to lower the parts of inflation that are driven by domestic demand,” he added. “And that is critical to bringing price increases back in line with our 2% inflation target.”

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