New York, Tokyo The shelling of a nuclear power plant in Ukraine by Russian troops makes investors around the world even more uncertain. After moderate losses on Thursday, US futures are pointing to an even weaker open on Friday. Pre-market indicators also point to a sharp minus for the Dax. The leading index is expected to be below 13,400 points.
The indicators from Asia confirm the weak mood. In Japan, the Nikkei fell 2.2 percent below the 26,000 point mark. The broader Topix lost two percent to 1845 points. In South Korea, the Kospi lost more than 1 percent, the Hong Kong Hangseng index 2.6 percent.
"The alternate rally-sell-rally-sell pattern that began with the start of the Russia-Ukraine conflict continued Thursday as US stocks tumbled again," said major bank ING. In addition, Asian investors were concerned about a further surge in prices from the already high commodity prices and further disruptions to the supply chain.
In the case of possible delivery bottlenecks, the Japanese business newspaper cited palladium used in autocatalysts and neon, which is required for laser-based lithographic processes in the semiconductor industry. Russia is the world's largest supplier of palladium, and Ukraine has a 70 percent share of the world market for neon.
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There is already an alarm mood, especially in the large chip locations South Korea and Taiwan. Although an interruption in the chip supply chain is currently not an "immediate" risk, judged David Wong, technology analyst at the Japanese investment bank Nomura. But according to industry estimates, manufacturers only stock neon for six months.
>>Read here: War in Ukraine could hit Asian chip and battery production hard
These concerns were reflected in the prices of individual companies. Car manufacturers, chip and electronics manufacturers lost particularly heavily in Japan. Toyota's share price fell at times by more than three percent. Honda was also over three percent and Nissan over five percent lower.
The chip manufacturer Renesas lost four percent in value, Tokyo Electron, a supplier of production equipment in the chip industry, 4.3 percent and Sony two percent. South Korea's electronics group Samsung Electronics, the world's largest supplier of memory chips, also came under pressure. Once again, the oil companies Idemitsu and Inpex were the winners of the fear of rising raw material costs. After initial losses, they continued to chase prices.
The US is leading the way
The night's developments also weighed on sentiment on Wall Street. The indicators for the Dow Jones and S&P 500 were still almost 0.7 percent down in the early morning.
The most important indices closed with slight losses on Thursday. The Dow Jones ended 0.3 percent down at 33,794 points, the market-wide S&P 500 closed 0.5 percent lower at 4363 points. Nasdaq tech values slipped even more significantly. At the end of trading there was a minus of 1.5 percent.
In the USA, too, rising commodity prices are fueling the debate about the threat of stagflation. And that's still the best scenario for stocks, independent capital market consultant Ed Yardeni points out. “The US Federal Reserve always talks about having all the necessary tools to fight inflation. But the only tool I know of is to raise interest rates so much that it leads to a recession," he told Bloomberg TV.
However, he does not assume that Fed Chair Jerome Powell will do so. "Instead, we will live with higher inflation and higher interest rates without sliding into a recession for the foreseeable future," believes Yardeni. Equity markets would adjust accordingly.
That would be a markedly different sentiment than investors have experienced over the past two years. At that time, the central bank, with its ultra-loose monetary policy, promoted sharply rising and sometimes overheated stock markets, especially for technology companies.
Software providers Okta and Snowflake were among Thursday's biggest losers. They fell by eight and 15 percent, respectively. Salesforce and Adobe each lost over two percent. Tesla closed 4.6 percent down.
Citigroup's strategists are still optimistic. "We are still in favor of buying in phases of weakness and point out that stocks worldwide have risen 10 to 20 percent after geopolitical crises," wrote strategist Robert Buckland in a recent analysis.
Take a deep breath in US government bonds
Yields on 10-year government bonds eased slightly to 1.78 percent after posting their biggest one-day gain in two years mid-week.
David Grecsek from the asset manager Aspiriant assumes that there will also be increased fluctuations in bonds and their returns. After all, there are opposing forces that are currently affecting the market.
On the one hand, investors would flee to safe havens and thus increase the demand for bonds. But real yields are negative, which may deter some. Yields fall when bond prices rise.
Japan provided an example of the unrest. In contrast to the USA, interest rates on ten-year government bonds there rose by 0.005 percentage points to 0.16 percent.
Iran in the focus of oil investors
Brent and WTI prices pick up again on Friday. A barrel (around 159 liters) of North Sea Brent is above the $112 mark, WTI costs $110. The day before, prices had risen again to multi-year highs, but slipped in the afternoon.
The change of direction followed positive signals from Iran. Talks on reviving the nuclear agreement have made good progress, it said on the market. A conclusion of the nuclear deal would enable oil exports from Iran and thus counteract impending bottlenecks. This trend also continued in Asia. Dubai crude fell $3.90 to $108.70 a barrel.
Meanwhile, the rally in base metals continued. Zinc hits highest level since 2007, aluminum prices hit record high. Here, too, investors remain concerned about the effects of the Ukraine war on the economy and supply chains.
The government of US President Joe Biden imposed further sanctions on Russian oligarchs on Thursday and signaled that energy sanctions are not yet off the table. This led to additional uncertainty. Above all, further rising oil prices would "cause headwinds, no question about it," said Mark Stoeckle, head of asset manager Adams Funds.
Downtrend for Bitcoin and Co.
The major currencies in Asia were mostly quite stable. The dollar lost only slightly against the yen, which is often used as a safe haven during crises. Only the euro fell more than one percent against Japan's national currency at times.
Cryptocurrencies, on the other hand, were weaker again. Market leader Bitcoin was down more than four percent and cost $41,439. The second largest digital currency, Ether, lost over six percent to trade at $2726.
The stock exchange supervisory authority in the USA and the Treasury Department had recently indicated new regulatory measures. The US wants to ensure that Russia does not use digital money to circumvent sanctions. Crypto exchanges such as Coinbase, Kraken and Binance are particularly in focus.
In the meantime, however, according to the current status, Russian citizens who are not affected by sanctions are allowed to carry out crypto transactions. Meanwhile, Ukraine, which is taking advantage of virtual coins more than any other nation, has refrained from launching its own digital currency. At the beginning of the week, Digital Minister Mykhailo Fedorov hinted at such a plan via Twitter.
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