New York, Sep 10 (IANS) Ukrainian forces have made sweeping advances in September in their fight against Russia, easing some investor fears of a prolonged war-induced energy crisis in Europe, the media reported.
European markets closed higher Friday, as did markets in the Asia-Pacific area. The Dow jumped more than 200 points in the US and the major indexes appeared on track to end a three-week slump, the CNN reported.
Equity prices tend to rise on news of Ukrainian gains or improvement on the ground, explained Joseph Brusuelas, chief economist at RSM US, CNN reported.
Ukrainian President Volodymyr Zelensky claimed on Friday that the country’s military has retaken more than 1,000 sq. km of territory since the beginning of this month, as they continue to press on in the Kharkiv and Kherson regions.
Over the past three days, Ukrainian forces have raised their country’s flag in the Kharkiv settlement of Shevchenkove, an important Russian logistics hub inside Ukraine.
“If you map those three days over the direction of the market, said Quincy Krosby, chief global strategist for LPL Financial, it’s clear that this is a contributing factor to equity gains. “This is good news, even at the margin,” she added, CNN reported.
The war in Ukraine has been mentioned as a factor in about 250 S&P Global (NYSE:) credit rating downgrades or outlook cuts since it began in late February. The increase in energy costs and interest rates globally means the impact is likely to spread.
“This lack of energy is forecast to significantly bring down the European Union’s economy this winter. Europe in a recession will affect US trade,” said Anthony Denier, CEO of Webull.
“But, if Ukraine continues to post victories, the gas issue may be solved and everyone will be happy. So people are buying stock today.”
Russia’s invasion of Ukraine has slowed global growth and raised inflation through large energy supply disruptions — Russia accounts for well over 10 per cent of global oil and production. Grain supply has also been disrupted, leading to a spike in commodities prices.
An energy price shock and central bank pivot to fight inflation in Europe has further dampened investor sentiment. Recessions now look certain in Europe as prices of gas continue to accelerate into the winter, CNN reported.