US stocks closed lower for the third straight session on Friday, notching a second consecutive losing week as escalating tensions between Russia and Ukraine and concerns about the Fed's next steps dominated the session. Russian media said a car exploded near a government building in separatist-controlled Donetsk, and civilians were ordered to evacuate, heightening fears that Russia is planning to invade Ukraine. Meanwhile, St. Louis Fed Bullard warned that inflation could get out of control without rate hikes and Fed Bank of Cleveland President Loretta Mester said she supports hiking rates faster if needed. On corporate updates, BoA analysts reiterated their “underperform” rating on Intel’s stock, while Roku shares plunged 22% after quarterly revenues missed expectations and issued weak guidance. The Dow lost 234 points, S&P 500 was down 0.7%, and Nasdaq ended 1.2% lower.
The Nikkei 225 Index fell 0.41% to close at 27,122 while the broader Topix Index shed 0.36% to 1,924 on Friday. Japanese technology firms led the declines following a sharp overnight rout among US peers, with losses from Lasertec (-2.5%), Tokyo Electron (-2.4%), Recruit Holdings (-2.2%), Murata Manufacturing (-1.7%) and Keyence (-1.7%). Meanwhile, inflation in Japan slowed in January, giving the central bank room to keep easy monetary policies.
European equity markets reversed gains to close in the red on Friday, with Germany’s DAX down more than 1%. On the corporate front, Allianz reported lower-than-expected earnings although its revenues topped estimates.
The FTSE 100 reversed course during the session to close 0.3% lower at a two-week low of 7,515 on Friday, in line with its European peers, as fears of imminent war returned after reports that citizens in the self-proclaimed Donetsk People’s Republic were evacuating the region. At the same time, storm Eunice triggered red warnings in England, with record gusts of wind in parts of the country that have ripped the roof of the O2 arena and left tens of thousands of homes without power. Losses were limited by upbeat retail sales in January and strong earnings from warehousing specialist Segro. Among the worst performers, NatWest Group shed 2.4% after the bank beat estimates but lowered its annual cost-cutting target for the next two years. On the week, the FTSE 100 lost 2%, its worst week since late November.
The CAC 40 reversed early gains to close 0.3% lower at 6,930 on Friday, its third consecutive session in the red. On the corporate front, Hermes dropped 4.6% from reporting slower sales growth during the fourth quarter of 2021, mostly due to capacity constraints on its leather goods and saddlery divisions. At the same time, EDF fell 2.3% after announcing a rights issue that will raise EUR 2.5 billion to improve its financial structure, as the group struggles with low availability of its nuclear plant fleets due to corrosion and safety issues. At the same time, Renault (unchanged) posted an operating margin of 3.6% for 2021, already exceeding its target set for 2023. Consequently, the group increased its margin target to 4% for 2022, despite the ongoing global shortage of semiconductors.
The FTSE MIB Index cut earlier gains to drop 0.6% and close at 26,507 on Friday. On the corporate front, Buzzi Unicem (-2%) led the losses due to its large exposure to the Ukrainian economy. At the same time, tech and manufacturing stocks both traded in the red, driven by STMicroelectronics (-2.3%) and Nexi (-2.6%). On the other hand, Eni gained 1% after posting an adjusted net profit of EUR 4.74 billion in 2021 compared to the EUR 0.758 billion loss in 2020, marking its strongest year since 2012, largely due to the rise in oil and gas prices during 2021. Meanwhile, the Italian government finalized new measures to set aside EUR 6 billion to cap soaring energy costs in the country.
The BSE Sensex ended 59.04 points or 0.1% lower to close at 57,833 on Friday, extending declines for the third straight session as investors remained cautious. Moreover, domestic sentiment was slightly downbeat after the SBI in its Ecowrap research report estimated India’s GDP to grow by 5.8% during the October-December period of 2021 while it also revised lower the GDP growth rate to 8.8% for the full 2021-2022 fiscal year compared to its earlier estimate of 9.3%. Losses in capital goods and technology slightly outweighed the gains in banks and financials. Among the individual stocks, 17 out of 30 stocks on BSE Sensex ended in the red, with declines led by Ultra Cement Company (-1.88%), Mahindra and Mahindra (-1.36%), Infosys (-1.06%) and Reliance (-0.85%). On the week, the BSE booked a 0.55% loss.