A look at the day ahead in markets from Dhara Ranasinghe.
A fire at a training building near the largest nuclear power plant in Europe during intense fighting between Russian and Ukrainian forces has been extinguished, but markets globally were left on edge on Friday.
Stock markets across Asia were a sea of red, with MSCI’s gauge of stocks outside Japan hitting a 16-month low and Japan’s Nikkei down 2.2%.
European stock futures are sharply lower and Wall Street, when it opens later, looks set to join the selloff. MSCI’s global equity benchmark is on track for a fourth straight week of losses.
Also, watch the euro, which has been dealt another blow by latest developments in Ukraine.
The single currency has shed almost half a percent and hit its lowest since May 2020 at $1.1010. It has lost over 2% this week and is set for its worst week since April 2020.
For some, a move to parity — a word not used for some time — versus the dollar, could be on the cards. As currency weakness adds the inflation headache, it may be time to watch how the European Central Bank responds to currency weakness.
Note some economists reckon headline inflation in the euro area could top 6% this year. The ECB’s target is 2%.
U.S. payrolls data — usually the top focus for markets — almost appears to have faded to the background with markets gripped by the war in Ukraine.
Economists polled by Reuters forecast the U.S. economy created 400,000 jobs last month, after a 467,000 gain in January. That would leave employment 2.5 million jobs below its pre-pandemic level.
All the lost jobs are expected to be recouped this year, but the war in Ukraine could hurt business confidence and slow job growth in the months ahead.
The Federal Reserve, which looks set to start its rates lift off later in March, will be watching the labour market closely.
NFP https://fingfx.thomsonreuters.com/gfx/mkt/byvrjejmbve/Pasted%20image%201645660089349.png
Key developments that should provide more direction to markets on Friday:
– IAEA says ‘essential’ parts of Ukraine nuclear plant not affected
– Oil rebounds as escalating Ukraine conflict hits supplies
-Nike, IKEA close Russian stores as sanctions, trade restrictions bite
– German trade/current account
– Euro zone retail sales
– U.S. non-farm payrolls
(Reporting by Dhara Ranasinghe; editing by Sujata Rao)
