5th March – 11th March 2022 | Another week in the markets

S&P 500	Nasdaq	VIX	DJIA	Russell 1000	NYSE
4,204.31	12,843.81	30.75	32,944.19	2,319.57	15,753.70
-1.85%	-2.50%	-6.45%	-0.91%	-1.97%	-1.10%
Nifty 50	Gold	Silver	Brent crude	USD-INR	EUR-INR
16,630.45	$1,986.97	$25.85	$109.33	76.75	83.77
5.08%	0.84%	0.62%	-5.49%	0.42%	-0.17%

 

Hello Saturday,

As the Russian invasion of Ukraine crossed its two-week mark, market anxiety and short-term volatility continued to increase this week causing most major indices to end the week in the red. 

• US bans import of Russian oil, gas, and coal; Brent crude oil price surged to $131 a barrel 
• Inflation in the US reaches a 40-year high with the year-on-year Consumer Price Index (CPI) increasing by 7.9%
• National average gasoline prices in the US crossed the 2008 record high at over $4 a gallon (INR 88 per litre)
• Global giants across industries suspend their operations in Russia 
• Biden orders research and development of a central bank-backed digital currency

Taking stock | Geopolitics gets oily | Gasoline incontinence | Global brands ghost Russia | Amazon delta | Fedcoin beginnings | No nickel for your thoughts | Invest wisely

Taking stock 

While all the indices took a hit this week, Nasdaq entered the bear territory with its intraday low for the week on Tuesday being 22% below its last peak. The Dow fell 230 points and the S&P 500 continued being in correction territory at about 14% off from its high. 

Geopolitics gets oily

Brent crude oil prices soared to $139 a barrel on Monday, the highest ever since 2008, as the US and allies were considering banning Russian oil imports. On Tuesday, the US went ahead and banned all imports of Russian oil, gas, and coal after days of weighing the impact of this move on the US economy. 

Meanwhile, UAE said that it’s in favour of increasing oil production and will encourage other Opec members to do the same. This announcement from the UAE significantly pulled back Brent crude price down to $111. Currently, it’s at $109.33.

Brent Crude prices over the last few months:

Source: MacroTrends

Gasoline incontinence 

The national average gasoline prices surged to $4.17 a gallon on Tuesday and Americans haven’t paid this much for gas since the record high of 2008. This has only continued to increase in the days that followed and currently, the national average for one gallon of gas is $4.33. 

This increase comes not only from the Russian invasion of Ukraine but also an increase in demand since consumer spending has been recovering from the pandemic – in April 2020, gasoline was at a low of $1.17. Experts believe this could go up to $5 a gallon, given the rising inflation rate in the country. The Consumer Price Index (CPI) jumped 7.9% from last February, the highest increase in 40 years. 

Global brands ghost Russia

Owing to pressures from consumers and investors, several Western business giants have announced plans to either entirely withdraw or pause their sales and operations in Russia. From top retail brands to corporate giants, all of them have taken a clear stand against Russia.

Shell, for instance, is exiting its joint ventures in Russia. Exxon Mobil is also discontinuing its major oil and gas project on the eastern Russian coast. H&M, Nike, and Adidas have announced plans to pause their sales with over hundreds of stores each in the country. Professional services firms such as McKinsey, BCG, EY, Deloitte etc. are pulling out of the country. McDonald’s announced the temporary closure of all its 850 Russian locations – which is estimated to cost them about $50 million a month. Needless to say, ghosting comes at a price.

Amazon delta 

On Wednesday, Amazon’s board approved its first stock split since 1999, a 20-for-1 split. As a result, Amazon’s stock price went up by 6% in intraday trading on Thursday. This move is to make the stocks more accessible to investors as one Amazon stock before the split is at about $2,950. If approved by shareholders, the shares will begin trading at the new, stock-split price from June 6th. 

Fedcoin beginnings

On Wednesday, Biden signed an executive order instructing the federal government to research and explore developing a US Central Bank Digital Currency or CBDC. A variety of agencies have been asked to begin research and submit reports on the various design and security issues along with the possible financial and societal impacts of issuing a digital dollar. 

The US won’t be the first country to issue government-backed digital currency. Earlier in January this year, China launched its pilot digital Yuan and has over 140 million people who have opened digital wallets. 

No nickel for your thoughts

Nickel trading was halted by the London Metal Exchange (LME) after nickel prices hiked by an unprecedented 250% to above $100,000 a tonne on Tuesday. 

Invest wisely

While the markets are volatile, your investment journey should not hit pause. With Appreciate, you can opt for Systematic Investment Plan (SIP) investing and benefit from dollar-cost averaging. This strategy allows you to invest a fixed sum of money regularly, irrespective of the market price of stocks. This way the average price of your investments turns out to be lower over time as the short-term market fluctuations are absorbed. 

Download the Appreciate app to continue your wealth creation journey and build your investment portfolio confidently. 

Warm regards,
Another week
in the markets