Thursday, 9 February, 2023
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Poland missile relief dents dollar; stocks retreat

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By Amanda Cooper
LONDON (Reuters) -Global stocks eased from two-month highs on Wednesday while the safe-haven dollar fell, after Poland’s president said a missile that hit his country was probably a stray Ukrainian defence projectile, dispelling fears that it originated from Russia.

Initial relief was enough to encourage some flows back into equities and commodities, but given the gains of the last couple of weeks, investors took the news as an opportunity to book profits, given the vulnerability of the economic backdrop in Europe and China.

“It is the worst when we hear such news. Even if it’s not from Russia, this still causes uncertainty in the markets and the European market is especially fragile, heading to a confirmed recession next year due to the energy crisis and geopolitical tensions,” Raed Alkhedr, chief market analyst at, said.

Data on Wednesday showed U.S. retail sales rose by 1.3% in October, compared with expectations for a 1.0% rise, showing consumers were undeterred by high inflation last month.

This gave a bump to the dollar, which cut some of the day’s losses and weighed heavily on European shares.

The STOXX 600 fell 0.8%, down from Tuesday’s two-month peak, depressed by the auto sector after a report that Germany’s Mercedes Benz cut its China electric vehicle prices as sales lagged.

Germany’s DAX fell 0.9%, while Britain’s FTSE 100 eased 0.2%

The MSCI All-World index hovered around the day’s lows, down 0.2%.

When the missile struck, NATO member Poland first said a Russian-made rocket was responsible and summoned Russia’s ambassador to Warsaw for an explanation after Moscow denied responsibility.

The dollar, which acts a safe haven in times of geopolitical or market turmoil, rallied overnight, before falling throughout the European session. But it pared losses after the retail sales figures, trading down 0.1% down against a basket of major currencies.

“The initial reaction was understandable given that any deliberate strike on a NATO member would mark an enormous escalatory step,” Deutsche Bank strategist Jim Reid said.

“It soon became apparent that this was highly unlikely to be a direct attack.”

U.S. stock futures struggled to recover any ground, with S&P 500 e-minis falling 0.2% and Nasdaq 100 futures down 0.3%.

The euro, which hit its highest since early July this week, rose 0.5% to $1.0403, while sterling was up 0.2% at $1.1889 after UK data showed consumer inflation rose more than expected in October.

With political tensions injecting volatility into markets, benchmark 10-year Treasury yields fell 1 basis point to 3.79%, around their lowest in a month.[US/]

Gold rose 0.2% on the day to $1,776 an ounce, supported by a slightly weaker dollar, while Brent crude futures fell 0.6% to $93.33 a barrel, having retreated from an overnight high of $94.79. [GOL/] [O/R]

(Additional reporting by Shreyashi Sanyal in Bengaluru, Ankur Banerjee in Singapore and Xie Yu; Editing by Edwina Gibbs, Edmund Klamann, Simon Cameron-Moore, John Stonestreet and Barbara Lewis)

Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.

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