Ukraine’s surprising comeback could boost markets

Ukraine’s surprising comeback could boost markets

European stocks closed higher on Friday, as did markets in the Asia-Pacific region. the Dow (INDU) rose more than 200 points in the US and major indices seemed on track to end a three-week slump.

Share prices tend to rise after news of Ukrainian earnings or improvements on the ground, explains Joseph Brusuelas, chief economist at RSM US.

Ukrainian President Volodymyr Zelensky claimed Friday that the country’s military has recaptured more than 1,000 square kilometers of territory since the beginning of this month, while continuing in the Kharkov and Kherson regions.
Over the past three days, Ukrainian troops have raised their country’s flag in the Kharkiv settlement of Shevchenkove, a major Russian logistics hub in Ukraine, according to a photo located by CNN.
If you chart those three days in the direction of the market, said Quincy Krosby, chief global strategist for LPL Financial, it’s clear that this is a contributing factor to equity gains. “This is good news, even on the margins,” she added.

The Russian invasion of Ukraine has slowed global growth and increased inflation due to major energy disruptions – Russia accounts for more than 10% of global oil and natural gas production. Grain supply has also been disrupted, leading to a spike in commodity prices.

A shock in energy prices and a linchpin by the central bank to fight inflation in Europe have further dampened investor sentiment. Recessions now seem certain in Europe as gas prices continue to rise into the winter.

The war in Ukraine has been cited as a factor in about 250 downgrades in S&P Global’s credit rating or downgrades its outlook since it began in late February. The rise in energy costs and interest rates worldwide means the impact is likely to spread.

“This lack of energy is expected to cause the European Union’s economy to plummet this winter. Europe in recession will affect US trade,” said Anthony Denier, CEO of Webull. “But if Ukraine continues to win, maybe the gas problem will be solved and everyone will be happy. So people are buying stocks today.”

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