Escalation of war in Ukraine significantly increases gold, oil and other safe assets!
Gold, oil and other safe-haven assets, otherwise known as haven assets, from the Swiss franc to German government debt rose sharply on Friday after the escalation of the Russia-Ukraine conflict, while European gas prices rose and weak economic data put pressure on the euro.
In a week when Russia lowered its nuclear weapons threshold and fired an intermediate-range hypersonic ballistic missile into Ukraine, gold posted its best week in a year.
The euro fell to its lowest level since December 2022, last at $1.0432 and 0.4% on the day, as surveys showed business activity in the bloc took a surprisingly sharp turn for the worse this month.
European gas contracts hit a one-year high, widening concerns about the eurozone economy already under pressure from US President-elect Donald Trump's proposed trade tariffs, the collapse of the German government and a widening deficit. budget of France.
Brent crude futures gained 0.5% on Friday to $74.60 a barrel, up 5% this week, as Russia hit back at the US and UK for allowing Kiev to strike its territory with Western weapons by firing an intermediate-range hypersonic missile in Dnipro, Ukraine.
The index that tracks the U.S. dollar against rival currencies climbed to a 13-month high of 107.15 on Friday, boosted by haven buying as well as expectations that Trump's America-first policies will boost growth and inflation.
Bets that the Trump administration would take a lighter approach to regulation pushed bitcoin to the brink of $100,000 for the first time. Gold rose 1% to $2,688 an ounce on Friday and 5.2% higher for the week, while sterling fell 0.4% on the day to a six-month low of $1,253.
Traders expect Trump's tariffs to boost domestic consumer prices, with money markets betting on a roughly 58% chance of a Federal Reserve rate cut next month, up from 83% a week ago.
That has limited buying of US Treasuries, typically considered the world's least risky and most liquid financial assets, with the benchmark ten-year yield down just 2 basis points this week to 4.3892%.
However, geopolitical concerns have increased appetite for European haven assets.
Germany's 10-year Bund yield fell 7 bps to 2.244% on Friday, reflecting expectations of faster European Central Bank rate cuts. The Swiss franc, at €0.9264, was on track for a weekly gain of 1.7%.
In stocks, traders' reassessment of the prospects of artificial intelligence chipmaker Nvidia opened a new tab after a tepid response to its results earlier this week, supported by global stocks.
MSCI's index of world shares was set for a weekly gain of 1.1% even as Europe's Stoxx 600 was trading for a fifth straight weekly loss.
Britain's exporter-heavy FTSE 100 opens a new tab, took a daily gain of 0.7% as sterling weakened against the dollar, set for its best week since August, although futures hinted to slight losses for Wall Street's blue-chip S&P 500 later in the day.
In Asia, chipmaker stocks helped with Taiwanese open new tab gaining 1.5%, South Korean tech heavy open new tab up 0.8% and Japan's Nikkei open new tab advancing 0.8%.
Disappointing corporate earnings weighed on sentiment in China, however, with the blue-chip CSI300 index opening a new record down 3.1% on Friday and Hong Kong's Hang Seng Index opening a new record 1.9% lower.
In India, shares of Adani Group companies and their dollar-denominated bonds remained under pressure after chairman Gautam Adani was charged with fraud by US prosecutors.
Data in Japan showed that core inflation held above the central bank's 2% target in October, leading markets to price around 57% for a 25-basis-point Bank of Japan rate hike in December, although remained weak. The Japanese currency was last at 154.82 per dollar after falling 4% this quarter.
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