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By Geoffrey Smith
Investing.com -- A Russian attack kills scores of fleeing civilians at a Ukrainian rail station. Russia's central bank cuts interest rates sharply to stave off a looming economic and financial sector crisis. Stocks are set to open higher, even though bond yields continue to advance, Marine Le Pen senses victory in France's presidential elections, and world food prices are rising at their fastest pace ever. Here's what you need to know in world financial markets on Friday, 8th April.
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1. Russia attacks fleeing civilians
Russian rocket artillery hit a train station in eastern Ukraine, killing over 30 people and injuring over 100 more, is one of the most shocking incidents yet in the six-week-long war.
The victims had gathered at Kramatorsk station as part of a mass evacuation of civilians ahead of an expected major Russian attack on eastern Ukraine. Russia’s Defense Ministry first said it had used high-precision missiles against three stations in the region, then accused Ukraine of staging the incident.
The attack comes as the EU confirmed its latest sanctions package, which bans imports of Russian coal. Japan also banned Russian coal imports on Friday. However, the attack is certain to raise the pressure on European governments, especially Germany, to apply the same treatment to Russian oil.
2. Russia cuts rates to stave off financial crisis
Russia’s central bank surprisingly cut its key interest rate by 3 percentage points to 17%, saying that the balance of risks in the economy had shifted away from inflation to economic recession and financial instability.
The move reflects a degree of success in cushioning the immediate impact of western sanctions on the Russian economy, but analysts still expect gross domestic product to contract by around 10% this year. Many businesses, including much of the country’s manufacturing sector, have already had to idle capacity as sanctions have hit the import of vital components. Russia releases fourth quarter GDP numbers for 2021 along with March CPI data at 12 PM ET (1600 GMT)
Official exchange rates for ruble had recovered to their prewar level ahead of the move, although economists have played down the importance of that because the central bank has imposed capital controls that don’t allow the currency to be freely bought and sold, while withdrawals from dollar accounts held locally by businesses and individuals are still subject to strict limits.
3. Stocks set to open higher, shrugging off rising yields
U.S. stock markets are set to open higher later, building on Thursday’s tentative recovery at the end of a week in which expectations for future U.S. interest rates have been aggressively repriced.