Morning: Futures stabilize even as commodities continue their meteoric rise

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The S&P 500 futures trade nine points, or 0.2%, above fair value as the futures market tries to stabilize from yesterday’s sell-off. The positive bias has formed without there being a decisively negative headline on Russia’s invasion of Ukraine.

Encouragingly, Russian forces have significantly slowed their advance ahead of a key diplomatic meeting on Thursday, according to Reuters, citing a Ukrainian presidential adviser. Commodity markets, to be fair, aren’t behaving like things are getting better.

Nickel futures, for example, more than doubled to over $100,000 a metric ton in a short squeeze, forcing regulators to suspend trading at the London Metal Exchange (LME), according to CNBC . While that gain was pared some, the LME suspended trading for the rest of the day.

Oil prices remain elevated above $120 per barrel ($121.81, +2.41, +2.0%) amid news that the EU is planning to phase out purchases of Russian energy.

Treasury yields are selling off, driving yields higher amid the inflationary pressures. The 2-yr yield is up eight basis points to 1.62%, and the 10-yr yield is up 11 basis points to 1.86%. The U.S. Dollar Index is down 0.3% to 98.98.

On the data front, investors will receive the Trade Balance for January (Briefing.com consensus -$87.5 billion) at 8:30 a.m. ET and Wholesale Inventories for January (Briefing.com consensus 0.8%) at 10:00 a.m. ET. The NFIB Small Business Optimism Index for February decreased to 95.7 from 97.1 in January.

In U.S. Corporate news:

  • Mandiant (MNDT 21.80, -0.69): -3.1% after confirming an agreement to be acquired by Alphabet’s (GOOG 2530.00, +2.43, +0.1%) Google for approximately $5.4 billion, or $23.00 per share, in cash. The deal is inclusive of Mandiant’s net cash.
  • Dick’s Sporting Goods (DKS 104.25, +4.75): +4.8% after beating top and bottom-line estimates and guiding FY23 EPS above consensus.
  • Dell (DELL 50.68, +1.35): +2.7% after the stock was upgraded to Outperform from In-line at Evercore ISI.
  • Alaska Air (ALK 44.45, +0.76): +1.7% after the company provided an update on fuel costs following its 11% decline yesterday. The company expects first quarter economic fuel costs to be $2.60 to $2.65 per gallon versus prior expectation of $2.45 to $2.50 per gallon.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan’s Nikkei: -1.7% Hong Kong’s Hang Seng: -1.4% China’s Shanghai Composite: -2.4% India’s Sensex: +1.1% South Korea’s Kospi: -1.1% Australia’s ASX All Ordinaries: -0.9%.

    • In economic data:
      • Japan’s January Overall wage income 0.9% (last -0.4%). January Current Account deficit JPY1.189 trln (expected deficit of JPY880 bln; last deficit of JPY371 bln). January Leading Index -1.0% m/m (last 0.9%) and Coincident Indicator -0.5% m/m (last 0.4%)
      • Australia’s February NAB Business Confidence 13 (last 4)
    • In news:
      • Japan’s Finance Minister continued speaking in favor of higher wages.
      • Qantas CEO said that corporate demand is only about 60% pre-COVID levels and that prices will need to be increased if fuel prices don’t pull back.
      • China’s Foreign Minister Yi said that Taiwan will eventually return to the embrace of its motherland.

  • Major European indices trade on a firmly higher note. STOXX Europe 600: +0.5% Germany’s DAX: +1.7% U.K.'s FTSE 100: +0.7% France’s CAC 40: +2.1% Italy’s FTSE MIB: +3.1% Spain’s IBEX 35: +3.5%.

    • In economic data:
      • Russia’s Deputy Prime Minister said that Europe is pushing Russia toward an embargo on gas deliveries using Nord Stream 1.
      • EU leaders are expected to finalize an agreement later this week to phase out the use of Russian oil, gas, and coal. The EU may issue joint bonds to fund energy and defense.
      • Adidas is halting sales in Russia.

U.S. equity futures:

  • S&P 500 Futures: +4 @ 4,205
  • DJIA Futures: +26 @ 32,843
  • Nasdaq 100 Futures: -4 @ 13,315

Overseas:

  • Europe: DAX +1.7%, FTSE +0.7%, CAC +2.1%
  • Asia: Nikkei -1.7%, Hang Seng -1.4%, Shanghai Composite -2.4%

Commodities:

  • Crude Oil +2.63 @ 122.03
  • Nat Gas -0.277 @ 4.556
  • Gold +20.00 @ 2015.90
  • Silver +0.695 @ 26.415
  • Copper -0.0910 @ 4.6400