By
Steve Muchoki
April 16th, 2024
Despite the fact that the Dow Jones tanked in tandem with broader market sentiments, market expectations remain fluid as investors focus on macroeconomic policies that may emanate from regulators in the coming weeks.
The Dow Jones Industrial Average (INDEXDJX: .DJI) was weighed down on Tuesday after the Russia and Ukrainian tension took a drastic turn in which the former moved its troops into two breakaway regions in Eastern Ukraine. Market sentiments pushed the Dow lower by 1.42% atop a 482.57 points loss to 33,596.61.
The broader market sentiment was also dented by the S&P 500 Index (INDEXSP: .INX) which slid 1.01% to 4,304.76. The Nasdaq Composite (INDEXNASDAQ: .IXIC) also closed the Tuesday session in losses as it dropped 1.23% to 13,381.52. The latest bearish drop is an indication that the US stock market is far from attaining the much desired healthy outlook. The Dow Jones sank 1.9% last week, and the S&P 500 and Nasdaq Composite slid 1.6% and 1.8%, respectively.
“The Russia/Ukraine situation remains very fluid, and tensions remain high, and in the short term that will remain a headwind on stocks,” said Tom Essaye, founder of the Sevens Report.
The Russian and Ukrainian brawl has invaded market sentiments for the better part of this month as world leaders are moving ahead with sanctions against the Kremlin. Despite news that both President Joe Biden and Vladimir Putin agreed to an “in-principle” meeting to discuss the regional conflict, a report has it that the Russian president has secured approval from the State Duma to use force outside of its borders, backing the invasion into the two Ukrainian breakaway regions.
In response, President Biden has imposed economic sanctions on Russian Bank VEB and Kremlin’s military bank PSB. The sanctions will prevent VEB from accessing Western financing as it will not be able to do transactions involving the US Dollar either with US banks or their European counterparts.
“That means we’ve cut off Russia’s government from Western financing,” Biden said in remarks at the White House. “It can no longer raise money from the West and cannot trade its new debt on our markets, or European markets either.”
Britain also extended related sanctions on Five additional banks with the US and UK imposing targeted sanctions on some prominent Russian citizens.
Dow Jones Tanks but Expectations Remain Fluid
Despite the fact that the Dow Jones tanked in tandem with broader market sentiments, market expectations remain fluid as investors focus on macroeconomic policies that may emanate from regulators in the coming weeks. The Federal Market Open Committee (FOMC) is expected to raise interest rates when it meets on March 15-16. This potential interest rate hike is expected to impact rate-sensitive sectors such as tech and banking.
“While Monday’s episode will have important implications for Russia’s political relations with foreign partners, a significant market event is likely avoided for the time being, but the trajectory in the coming weeks will be important to monitor from a rising market risk perspective,” said Ed Mills of Raymond James.
American publisher of textbooks, instructional technology materials, and reference works amongst others, Houghton Mifflin Harcourt Co (NASDAQ: HMHC) was one of the biggest gainers in the sea of reds recorded. The company soared by 15.34% to $20.90 as the firm unveiled a deal in which it plans to be taken private by Veritas Capital. The deal will price the shares at $21 and is expected to close by the end of Q2.