Russia Avoids Historic National Debt Defaults, World Shares Cheer

Russia dodged a historic government debt default, world stocks cheered

Global stocks rose on Friday after Russia made a coupon payment due on two of its dollar -denominated sovereign bonds this week, even as Western sanctions have pushed Russia’s financial affairs into a gloomy state.

Russia’s finance ministry said on Thursday that it has sent a $ 117 million coupon payment on two dollar -denominated sovereign bonds to be paid this week. Despite Western state sanctions against Moscow in response to the Ukrainian invasion on February 24, it was the most significant attack on European countries since World War II.

“If you think about where we could be if Western governments don’t allow the use of frozen funds for coupon payments on Russian sovereign bonds, we’re going to sit on top of world economic failure,” Jamie Cox, managing partner at Harris Financial Group in Virginia, told Reuters.

“As a result, some of the biggest impacts on the global financial system will be delayed in the future – that’s great,” he added.

Despite widespread concerns that Russia will default on its debt payments for the first time since its financial crisis in 1998, coupon payments in two dollar -denominated sovereign bonds helped investor sentiment.

In fact, the MSCI world equity gauge, which measures stocks in 50 countries around the world, rose nearly 1 percent. European stocks rose slightly, and the U.S. index rose, with the Standard and Poor’s 500 index closing over 1 percent higher for the day.

“We are in the midst of a rally of relief after such a deep sell-off in technology before the possibility of a rate passage by the Fed. Now that they have removed all uncertainty about rates, technology stocks can be resold,” Mr Cox added.

The U.S. dollar was supported by the Federal Reserve’s first rate hike since the outbreak. Expectations are getting stronger for an aggressive Fed rate hike path. With most major central banks likely to struggle to match the U.S. central bank’s tightening trajectory, it will create clear interest rate differentials and maintain U.S. dollar bids.

Expectations for a stronger dollar have picked up a bit of gold luster, with the price of the precious yellow metal falling on Friday and marking the most significant weekly fall in nearly four months.


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