Russian Markets Reopen

By Nicholas Jasinski |  Thursday, March 24 Tug-of-War. Investors can't make up their collective mind, it seems. U.S. stocks have whipsawed from strong gains, to losses, to gains again so far this week.  Indexes enjoyed another rally today, with few positive or negative catalysts to be seen. It comes after sharp declines yesterday, and broad gains on Tuesday. The Dow Jones Industrial Average rose 1% today, the S&P 500 added 1.4%, and the Nasdaq Composite rallied 1.9%. All 11 sectors in the S&P 500 closed in the green, led by growth-oriented groups such as technology. The daily tug-of-war between the bulls and the bears could continue for some time. Intertwined risks related to Federal Reserve policy, geopolitics, commodity prices, and economic growth aren't going away overnight. But stocks have moved down rapidly and indiscriminately, and the bargain-hunting instinct will remain strong for many on Wall Street. That includes J.P. Morgan's chief global markets strategist Marko Kolanovic, who sees value in the most beaten-down areas of the market that are pricing in worst-case scenarios. They could have the most to gain if relevant situations get marginally better. "With positioning light, sentiment weak and geopolitical risks likely to ease over time, we believe risks are skewed to the upside," Kolanovic wrote to clients this week. "As such, we believe investors should add risk in areas that overshot on the downside such as innovation, tech, biotech, EM/China, and small caps. These segments are pricing in a severe global recession, which will not materialize, in our view." Kolanovic is also bullish on commodities prices and shares of commodity producers. There was muted action on Russia's stock market today, which reopened today after being closed for nearly a month. Shares briefly rose 12%, before giving back most of their rise to close up about 4.4%. That's after falling as much as 45% on Feb. 24, when Russia invaded Ukraine. Today's trading hardly resembled normal market functioning. Barron's Joe Woelfel and Ben Levisohn explain: The MOEX Russia Index traded just 33 stocks out of the index’s normal 50. The market was opened for only four hours, closing at 2 p.m. local time. Stocks such as energy giant Lukoil and Gazprom finished the session with gains. Short-selling was banned, and Russian brokerages weren’t allowed to let foreign clients sell securities. With those measures put in place, a huge drop at the open wasn’t expected. Needless to say, without those artificial restrictions, it's unlikely that Russian stocks would have increased in value today. The measures can only delay the inevitable: As long as sanctions by the U.S. and its allies keep Russia essentially removed from the global financial system, Western investors will want nothing to do with Russian assets.

 

DJIA: +1.02% to 34,707.94 S&P 500: +1.43% to 4,520.16 Nasdaq: +1.93% to 14,191.84 The Hot Stock: Nvidia +9.2% The Biggest Loser: EPAM Systems -6.1% Best Sector: Technology +2.6% Worst Sector: Energy +0.2%