The fog of war

- Advertisement -

Nov 16 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

Investors clearly want to take stocks and risk assets higher to try and make up for a dismal year, and they’re getting a timely helping hand from surprisingly weak U.S. inflation numbers.

With daily direction seemingly driven by little more than the ebb and flow of hopes for a Fed pivot, they may have forgotten about the ongoing Russia-Ukraine war and its potentially catastrophic spillover risks.

Investors were jolted on Tuesday from any complacency that may have set in by reports that a blast in the eastern Polish village of Przewodow that killed two people was caused by Russian missiles crossing into Poland.

Russia denied the reports, calling them “a deliberate provocation”; Washington called them “incredibly concerning”; Ukraine’s President Zelenskiy said this represents a Russian attack on NATO territory and marks a “significant escalation.”

In the fog of war, clarity is hard to find.

The reports knocked nearly 2% off the Nasdaq, briefly pushed the Dow into the red and clipped 5 to 10 basis points off U.S. Treasury yields across the curve.

Wall Street still closed in the green thanks to a smaller-than-expected rise in U.S. producer prices, more evidence following Thursday’s CPI data that inflation has peaked.

It remains to be seen how Asian markets open on Wednesday. The inflation outlook is improving and markets are running with it – the S&P 500 is up 12% since the Oct. 13 low, the Dow is up 17% and the Nasdaq is up almost 10% since last Thursday alone.

But with world leaders gathered in Indonesia for the G20 summit, war and geopolitical risks are once again right at the forefront of investors’ minds. Or they should be.


Three key developments that could provide more direction to markets on Wednesday:

– China house prices (October)

– Japan machinery orders (September)

– Australia wage growth (Q3)

Reporting by Jamie McGeever in Orlando, Fla.; Editing by Josie Kao

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Jamie McGeever

Thomson Reuters

Jamie McGeever has been a financial journalist since 1998, reporting from Brazil, Spain, New York, London, and now back in the U.S. again. Focus on economics, central banks, policymakers, and global markets – especially FX and fixed income. Follow me on Twitter: @ReutersJamie

Read More: The fog of war

- Advertisement -

Notify of
Inline Feedbacks
View all comments