- US stocks shrugged off geopolitical concerns and advanced Monday amid outperformance in large-cap technology stocks.
- Recent developments in the Russo-Ukrainian war increase the risk of an EU embargo on Russian energy imports and the breakdown of peace talks.
- But major US banks have become more optimistic about the outlook for the stock market.
US stock markets rose on Monday despite the outright negative tone of the geopolitical news flow and more aggressive comments from Fed officials over the weekend. The S&P 500 rose about 30 points to just over 0.6% and is trading at the 4,575 zone, led by gains in large-cap tech stocks. That has helped the Nasdaq 100 to a healthy outperformance, with the big tech index up more than 1.6%, versus more modest gains for the Dow of just 0.2%.
As Russian forces withdraw from parts of northern Ukraine, a mountain of evidence of war crimes against civilians has emerged and, as a result, pressure has mounted on Western leaders to further tighten sanctions against Russia. Russia. There has been renewed talk of an EU-wide embargo on Russian oil imports and, with it, downside risks to the eurozone economy. Meanwhile, mounting evidence of Russian war crimes casts a dark shadow over the peace negotiations.
But, as noted, equities are becoming increasingly resilient, not least as a chorus of big US banks adopts a more bullish view on the asset class. The “risk-reward” stock market is not as poor as it is currently fashionable to believe, JP Morgan noted on Monday. “The Fed price review could be closer to the end, and headline inflation will mechanically peak soon… The start of the Fed tightening should not be viewed as a negative for stocks.”
In terms of individual drivers, the biggest story was microblogging social networking site Twitter’s historic gain of nearly 30% on the day following news that eccentric Tesla CEO Elon Musk had acquired a 9.2 stake. % in the company. Shares of TWTR surged above $50 on Monday after closing below $40 last Friday on speculation that Musk’s stake, which was acquired in mid-March but only revealed on Monday , was just the first step towards a full takeover of the company.
Tesla’s CEO has criticized Twitter for failing to adhere to free speech principles in recent weeks and there is speculation that Musk may want to take over the company to change the way it regulates speech on the platform. Of course, Monday’s price action means Musk is now making a healthy profit on his 9.2% stake, but the biggest upside to his net worth came in the form of a more than 5.5% increase in the price value of shares. Tesla shares after the company reported record deliveries in the recent quarter.
Technical levels
Source: Fx Street
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