Financial Associated Press (Shanghai, editor Xiaoxiang) news, for domestic investors who wake up in the morning, it is obviously easy to be "intimidated" by the sharp decline in US stocks overnight, especially the S&P 500 index has entered the correction range for the first time since the outbreak of the epidemic overnight, which seems to indicate that the global market environment is still full of thorns.
However, judging from a series of comparisons between the related markets in the European and American sessions overnight, the decline in US stocks on the day seems to be more caused by the make-up market after Monday's market break, while other multi-class asset classes have gradually shown signs of risk aversion last night...
U.S. stocks fell across the board? Don't panic Let's take a look at other markets first...
The three major U.S. stock indexes, which have experienced a long weekend break, generally closed down more than 1 percent on Tuesday as investors digested the impact of Russia's military presence in the Donbass region of eastern Ukraine. Among them, the S&P 500 fell 44.11 points to close at 4304.76 points, down more than 10% from the high of January 3, the first time the index has fallen into the technical correction area since the outbreak of the new crown epidemic in February 2020.
All 11 of the S&P 500's classes closed lower on Tuesday. Stocks that investors tend to flock to in times of uncertainty, including utilities and real estate stocks, suffered relatively small losses, while riskier stocks such as growth stocks suffered larger losses.
In addition to the S&P 500, the Dow Jones Industrial Index also closed down 482.57 points, or 1.4%, to 33,596.61 points on Tuesday, and the Nasdaq Composite fell 166.55 points, or 1.2 percent, to 13,381.52. The Nasdaq Composite index pulled back earlier than the S&P 500 as early as January. The Dow is now down 8.7 percent from its record high in January and 17 percent from its November high.
The overall weakening of the US stock market has once again worried many investors who are close to the trend of Wall Street. However, many market participants said on Tuesday that considering that the US stock market was closed on Monday due to the US Presidential Day holiday - almost all other market stock indexes in the world fell sharply because of the tension between Russia and Ukraine on the same day, the us stock market on Tuesday was undoubtedly normal. Overnight, what is really worth noting is the reversal of other multi-class assets!
The most obvious is undoubtedly the Russian asset that suffered a sharp sell-off on Monday.
In the foreign exchange market, the Russian ruble fell below 80.90 against the US dollar before the European stock market, continuing to hit a new intraday low since November 2020, but after entering the European and American session, it quickly came out of the rebound market, smoothing out all the declines and turning up, especially after US President Biden announced a new round of sanctions against Russia, the ruble instead jumped in the short-term line because of the landing of boots.
Also experiencing a "magical reversal" is the Russian stock market. Although russia's benchmark stock index, the MOEX index, once plunged 10 percent at the start of Tuesday, it magically turned higher during the session, eventually closing up 1.58 percent.
The "hemostasis" of the Russian currency market also helped the pan-European stock index stop the three-day decline and come out of the trough set by Monday since October 6 last year. The Pan-European STOXX 600 index was essentially flat at the end of trading, with auto, travel and technology stocks leading the gains, while retail and financial stocks were the most down.
Germany's DAX index edged lower by 0.26 percent on the day in the performance of stock indexes in major European economies, but it was already the biggest drop among Europe's major stock indexes, led by Germany's heavy reliance on Russian gas supplies, and the country announced on Tuesday that it had suspended certification of the Nord Stream 2 gas pipeline. Meanwhile, France's CAC40 index edged down 0.01% on Tuesday, while the British FTSE 100 closed up 0.13%.
The frenzied buying of safe-haven assets needs to be temporarily over: gold and US treasuries are out of the high
With the collective stop-loss rally of many types of risk assets, the global market's frenzied buying demand for safe-haven assets has also come to an end overnight.
International gold prices hit their highest level in nearly nine months during the Asian session on Tuesday, but then quickly retreated, with investors repositioning gold near the key mark of $1,900 an ounce. Spot gold was down 0.2 percent at $1,902.71 an ounce at the end of Tuesday's New York session, the highest level of $1,913.89 since June 1 last year. U.S. gold futures rose 0.4 percent to $1907.40.
U.S. Treasury prices also failed to extend the rally at the beginning of the opening on Tuesday, and U.S. Treasury yields generally rebounded in various cycles after entering the European and American sessions. As of the end of the New York session, the indicator 10-year Treasury yield rose 0.8 basis points to 1.943%, after falling below 1.85% at one point earlier in the session.
Of the other cyclical yields, the 2-year Treasury yield rose the most violently. The 2-year Treasury yield rose 8.2 basis points at 1.562% in late trading, the 5-year Treasury yield rose 4.3 basis points at 1.869%, and the 30-year Treasury yield fell 0.5 basis points to 2.240%.
Tom Di Galoma, managing director of Seaport Global Holdings, said any shift to safe-haven assets that occurred on Monday appeared to have stopped, with the market seeing such extremes as a sell-off opportunity for the bond market. He said yields rose just over halfway through the Asian session on Tuesday as markets thought stocks were oversold after the News from Ukraine.
Kim Rupert, managing director of Action Economics' global fixed income division, also said the bond market is still more worried about rising inflation and the expected tightening of monetary policy by the Federal Reserve and other central banks than Ukraine. Rupert said: "I don't think short-term bonds have received any form of safe-haven buying during the European and American sessions, whether out of concern about Ukraine or out of a sharp stock market decline." The sell-off of US Treasuries is more motivated by fears of normalization of central bank policy and the potential for central bank errors leading to future recessions."
From the news side, US President Biden announced a new batch of sanctions against Russia on Tuesday, and Biden said that the United States will impose comprehensive sanctions on VEB Bank, Russia's two major financial institutions, and Promsvyazbank Bank, which engages in defense transactions. In addition, the United States has also imposed sanctions on Russian sovereign debt. Biden said that means the United States has cut off the Money the Russian government receives from the West, which will no longer be able to raise money from the West or trade new debt in the U.S. or European markets.
In addition to sanctions against financial institutions and sovereign debt, Biden revealed that he will also impose sanctions on the Russian elite and their families in the coming days. Biden promised to impose more sanctions on Russia if Moscow enters Ukraine further.
However, industry analysts believe that the scope of this round of US sanctions is still relatively restrained, and the targets of sanctions do not include russia's largest banks. Brian O'Toole, a senior atlantic council fellow who used to work in the U.S. Treasury's sanctions division, said Biden's sanctions could be incremental.