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LGT Navigator: Ukraine poker continues to cause nervousness

February 15, 2022

A potential further escalation of the Ukraine conflict continues to cause nervousness on capital markets. While Europe's stock exchanges suffered losses at the beginning of the week, the prospect of talks between the parties to the conflict provided some relief on Wall Street. Russia, for example, apparently wants to continue talks with the US and its allies on demands for security guarantees in Europe. In addition to the geopolitical poker, interest rate worries continue to keep the stock markets firmly in their grip.

Ukraine poker continues to cause nervousness

On the New York stock exchange, the geopolitical uncertainties and the imminent interest rate turnaround of the Federal Reserve caused losses. The Dow Jones Industrial lost almost half a percent and closed at 34'566.17 points. The S&P 500 lost -0.38% and closed at 4'401.67 points. On the technology exchange Nasdaq, however, the indices could hold just above the closing prices of last Friday.

Regarding the expected interest rate turnaround of the Federal Reserve, capital markets are waiting for new clues in the minutes of the last interest rate decision in January, which will be published tomorrow evening. The bond markets are now pricing in more than six interest rate hikes in the US within a year. This means that the US key interest rate could be above +1.5% in January 2023. Meanwhile, the yield on ten-year US government bonds is currently stuck at just under two percent.

In Asia, most stock indices followed the negative guidance from overseas. In Tokyo, the Nikkei 225 traded around -0.8% lower than the previous day. Chinese shares were able to partially gain after China's central bank provided more liquidity to support economic growth.

US warns of imminent attack by Russia in Ukraine

US Secretary of State Antony Blinken reiterated concerns that Russia could launch military action against Ukraine in the next few days. “Everything we see in terms of the deployment of Russian forces around Ukraine, on all sides of Ukraine, leads us to that conclusion,” Blinken said.

Moscow shows willingness to talk, but insists on its demands

According to Russian Foreign Minister Sergei Lavrov, there is still a chance for negotiations. At the same time, however, he stressed that Russia would stick to the security guarantees it had demanded - in other words, a guaranteed renunciation by Ukraine of NATO membership. NATO has so far insisted that every country has the right to choose its alliance freely.

G7 backs Ukraine

The finance ministers of the G7 nations – the United States, Britain, Germany, France, Italy, Japan, and Canada – said they would provide Ukraine with further financial and economic aid. The seven nations, currently chaired by Germany, also reiterated that further military aggression by Russia against Ukraine would be met with a swift, coordinated, and forceful response in the form of economic and financial sanctions. This would have massive and immediate consequences for Russia's economy.


Economic Indicators February 15

MEZ Country Indicator Last period
08:00 GE Wholesale Prices (January, y/y) +16.1%
08:00 UK Unemployment Rate (December) 4.1%
09:00 ESP Consumer Prices (January, y/y) +6.1%
09:30 NL GDP Q4 (q/q) +2.1%
11:00 GE ZEW Economic Expectations (February) +51.7
11:00 EZ ZEW Economic Expectiations (February) +49.4
11:00 EZ GDP Q4 (q/q) +0.3%
11:00 EZ Eurogroupe meeting
14:30 US Producer Prices (January, y/y) +9.7%
14:30 US Core Producer Prices (January, y/y) +8.3%
14:30 US NY Fed Empire State Manufacturing (February) -0.70


Earnings Calender February 15

Country Company Period
SZ Straumann Annual
SZ Glencore Annual
SZ Alcon Annual
FR Engie Annual
NL DMS Annual
US Aribnb Q4
US Marriott International Q4


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Source: LGT Bank (Switzerland) Ltd.

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