Morning: Hopes for de-escalation in Russia-Ukraine conflict buoy futures

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The S&P 500 futures trade 16 points, or 0.4%, below fair value after yesterday’s 180-point turnaround in the S&P 500. Russian forces have continued their invasion into Ukraine’s capital, but there is no indication of a flight to safety in capital markets.

Treasury yields are trading higher with the 10-yr yield up two basis points to 1.99% and the 2-yr yield up six basis points to 1.60%. Gold futures are down 1.0% to $1906.50/ozt. The U.S. Dollar Index is down 0.2% to 96.97. Crude futures, meanwhile, are up 0.8% to $93.55/bbl.

In addition, growth stocks like Etsy ( ETSY 150.00, +21.84, +17.0%), Block ( SQ 111.38, +16.39, +17.3%), and Farfetch ( FTCH 19.51, +4.50, +30.0%) are seeing huge gains in pre-market action following their earnings reports. They each beat EPS estimates, but ETSY issued downside Q1 revenue guidance.

There might be some hope that the Russia-Ukraine situation can avoid further casualties and get resolved through diplomatic means. Ukraine President Zelensky said he’s open to negotiating with Russia, and China, according to CNBC , supports President Putin resolving the issue through negotiations.

Note, CNBC just reported that Russia said it’s willing to send delegation to Minsk for talks. Futures have improved on the news.

On the data front, investors will receive Personal Income (Briefing.com consensus -0.3%) and Personal Spending (Briefing.com consensus 1.5%) for January, PCE Prices for January (Briefing.com consensus 0.5%), and Durable Goods Orders for January (Briefing.com consensus 0.6%) at 8:30 a.m. ET.

Afterwards, the final University of Michigan Index of Consumer Sentiment for February (Briefing.com consensus 61.6) will be released at 10:00 a.m. ET.

In U.S. Corporate news:

  • Etsy (ETSY 150.00, +21.84): +17.0% after beating top and bottom-line estimates, although the company did guide Q1 revenue below consensus.
  • Block (SQ 111.38, +16.39): +17.3% after beating EPS estimates.
  • Dell (DELL 50.80, -5.04): -9.0% after missing EPS estimates on above-consensus revenue. Dell announced a quarterly cash dividend policy, with an initial quarterly dividend of $0.33 per share and expected aggregate fiscal 2023 dividends of approximately $1 billion.
  • Foot Locker (FL 34.37, -7.04): -17.0% after guiding FY23 EPS and revenue below consensus. Foot Locker beat EPS estimates, announced a 33% dividend increase, and approved a new $1.2 billion share repurchase program.
  • Farfetch (FTCH 19.51, +4.50): +30.0% after beating EPS estimates.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mostly higher note. Japan’s Nikkei: +2.0% (-2.4% for the week) Hong Kong’s Hang Seng: -0.6% (-6.4% for the week) China’s Shanghai Composite: +0.6% (-1.1% for the week) India’s Sensex: +2.4% (-3.4% for the week) South Korea’s Kospi: +1.1% (-2.5% for the week) Australia’s ASX All Ordinaries: +0.3% (-3.1% for the week).

    • In economic data:
      • Japan’s February Tokyo CPI 1.0% yr/yr (last 0.6%) and Tokyo Core CPI 0.5% yr/yr (expected 0.4%: last 0.2%). December Leading Index 0.9% m/m (last 0.4%) and Coincident Indicator -0.1% m/m (last -0.2%)
      • Singapore’s January Industrial Production -10.7% m/m (expected 0.4%; last 3.0%); 2.0% yr/yr (expected 10.0%; last 16.7%)
      • New Zealand’s Q4 Retail Sales 8.6% qtr/qtr (last -8.1%). January trade deficit NZD1.082 bln (last deficit of NZD477 mln)
    • In news:
      • Japan’s Prime Minister Kishida said that sanctions against Russia will be strengthened while South Korea is expected to reduce exports to Russia.
      • The Standing Committee of China’s National People’s Congress will meet on Sunday and Monday ahead of the annual session that will start on March 5.

  • Major European indices are on track for a higher finish to a volatile week. STOXX Europe 600: +2.0% (-2.8% week-to-date) Germany’s DAX: +1.8% (-4.9% week-to-date) U.K.'s FTSE 100: +2.5% (-1.7% week-to-date) France’s CAC 40: +2.0% (-4.1% week-to-date) Italy’s FTSE MIB: +2.3% (-4.0% week-to-date) Spain’s IBEX 35: +1.9% (-2.8% week-to-date).

    • In economic data:
      • Eurozone’s February Business and Consumer Survey 114.0 (expected 113.1; last 112.7). January M3 Money Supply 6.4% yr/yr (expected 6.7%; last 6.9%), January Private Sector Loans 4.3% yr/yr (last 4.2%), and January loans to nonfinacials 4.4% yr/yr (last 4.2%)
      • Germany’s Q4 GDP -0.3% qtr/qtr (expected -0.7%; last 1.7%); 1.8% yr/yr (expected 1.4%; last 2.8%). January Import Price Index 4.3% m/m (expected 1.6%; last 0.1%); 26.9% yr/yr (expected 23.7%; last 24.0%)
      • France’s Q4 GDP 0.7% qtr/qtr, as expected (last 3.1%); 5.4% yr/yr, as expected (last 3.5%). January Consumer Spending -1.5% m/m (expected -0.5%; last 0.2%). February CPI 0.7% m/m (expected 0.3%; last 0.3%); 3.6% yr/yr (expected 3.2%; last 2.9%). January PPI 4.6% m/m (last 1.3%)
      • Italy’s February Business Confidence 113.4 (expected 113.9; last 113.7) and Consumer Confidence 112.4 (expected 115.0; last 114.2)
      • Spain’s January PPI 35.7% yr/yr (last 35.2%)
    • In news:
      • European Central Bank policymaker Holzmann said that the conflict in Ukraine could delay the removal of stimulus.
      • Ukraine’s President Zelensky said that he is open to negotiating with Russia.
      • French Finance Minister Le Maire said that cutting Russia off from the SWIFT payment system is a last resort.
      • BASF reported strong results for Q4 but cautioned that profitability will be pressured this year.

U.S. equity futures:

  • S&P 500 Futures: UNCH @ 4,289
  • DJIA Futures: +3 @ 33,226
  • Nasdaq 100 Futures: -9 @ 13,970

Overseas:

  • Europe: DAX +1.8%, FTSE +2.5%, CAC +2.0%
  • Asia: Nikkei +2.0%, Hang Seng -0.6%, Shanghai Composite +0.6%

Commodities:

  • Crude Oil +0.52 @ 93.33
  • Nat Gas -0.117 @ 4.524
  • Gold -24.40 @ 1901.90
  • Silver -0.442 @ 24.245
  • Copper +0.0160 @ 4.4720
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