European shares mute after biggest weekly gain since 2020

European stocks were muted on Monday morning, after best week since 2020, when a rally fueled by the prospect of peace in Ukraine stalled and benchmark oil prices rose above $110 a barrel.

Stoxx 600 regional share index, which last week wiped out all losses suffered since Russia invaded its neighbor in February, added 0.1%, Germany’s Xetra Dax traded sideways, in while London’s FTSE 100 rose 0.5%. Chinese stocks fell as traders weighed the impact of new coronavirus restrictions.

Brent crude rose 3.9% to $112.2 a barrel, hitting a $110 high for the first time in more than a week, on renewed worries about global supply shortage.

The moves come like Fierce fighting engulfed the Ukrainian port city of Mariupol overnight, even after Turkey, which is brokering a peace between Russia and Kyiv, announced the two countries were converging on key aspects of a deal. favorable.

Investors’ attention this week will turn to the economic impacts of the Ukraine conflict, analysts say, with the European Commission’s March consumer confidence index due out on Tuesday and the purchasing managers index for the region’s manufacturing and services businesses on Thursday.

The data will “provide guidance on the impact on economic growth, further price pressures and new supply tightening following Russia’s invasion of Ukraine,” said analysts at Daiwa Securities.

Commodity futures trade implies Wall Street’s S&P 500 stock index, which also ended its best week since November 2020 on Friday, will drop about 0.1% in early New York trades. .

In Asia, Hong Kong’s Hang Seng lost 0.9% with sharper declines in China’s technology and real estate shares.

Autumn brings a China market up last week after Beijing said it would introduce “favorable” measures to support the economy and financial markets.

Hong Kong-listed Chinese property shares fell, with the Hang Seng Mainland Properties index losing as much as 4.8% in early trading next year. Evergrande, the country’s most indebted developer, has suspended trading in its shares. The company’s electric vehicle business and property service units were also suspended.

Of China CSI 300 lost up to 1% before dropping to 0.2%.

“We have seen unusual movements in MSCI China over the past few days as global investors reassess their need for access to equity,” said analysts at Nomura. for the world’s second largest economy.

They added that the negative first half of last week was driven by geopolitics, with traders concerned about China’s support for Russia in the war against Ukraine.

Chinese stocks were also hit by new Covid-19 restrictions imposed to combat the country’s biggest outbreak since 2020 and concerns about Xi’s direction of promoting “common prosperity”. Xi Jinping, they added.

But analysts at Australia’s Westpac note that the latest restrictions appear to be curbing infections rapidly. From the end-2021 GDP pulse and February performance results, it seems fair to conclude that the net economic impact of the authorities’ zero Covid-19 approach is reduced.

Elsewhere, aluminum prices rose after reports that Australia would ban exports of alumina, a key ingredient to Russia, with contracts in Shanghai rising as much as 3.1 per cent on Monday and futures contracts in China. on the London Metal Exchange rose as much as 4.8%. , according to Reuters data.

The yield on the 10-year U.S. Treasury note, a barometer for the worldwide cost of debt that is inversely proportional to its price, rose 0.04 percentage points to 2.19 percent.

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