Morning: Negative bias persists as cease-fire talks break down

Education Blogs
1

The S&P 500 futures trade 30 points, or 0.7%, below fair value as the Russia-Ukraine situation continues to weigh on sentiment.

The latest developments have seen no progress in cease-fire talks between Russia and Ukraine with Russian forces even attacking a civilian area in Kharkiv. Both sides will continue negotiations, but the market is thinking it could get worse before it gets better.

Treasury yields have taken another steep drop, WTI crude futures are trading back above $100 per barrel ($101.17, +5.45, +5.7%), gold futures are up 1.2% to $1924.00/ozt, and the CBOE Volatility Index is up 7.1% to 32.29.

The 2-yr yield is down 13 basis points to 1.30% (-27 bps this week), and the 10-yr yield is down 11 basis points to 1.73% (-26 bps this week). The U.S. Dollar Index is up 0.4% to 97.04.

Separately, shares of Target ( TGT 220.00, +22.23, +11.1%) and Workday ( WDAY 244.50, +15.45, +6.8%) have risen nicely in response to their earnings reports. Zoom Video ( ZM 129.00, -3.60, -2.7%), however, trades lower after providing downside guidance for the rest of the year.

On the data front, investors will receive the final IHS Markit Manufacturing PMI for February at 9:45 a.m. ET, followed by the ISM Manufacturing Index for February (Briefing.com consensus 58.0%) and Construction Spending report for January (Briefing.com consensus -0.4%) at 10:00 a.m. ET.

In U.S. Corporate news:

  • Target (TGT 220.00, +22.23): +11.1% after beating EPS estimates with a slight revenue miss.
  • Workday (WDAY 244.50, +15.45): +6.8% after beating EPS estimates and raising its FY23 subscription revenue guidance.
  • Zoom Video (ZM 129.00, -3.60): -2.7% after guiding EPS and revenue below consensus for Q1 and FY23. The company beat top and bottom-line estimates and authorized a $1.0 billion share repurchase.
  • Novavax (NVAX 77.80, -5.57): -6.7% after missing top and bottom-line estimates and guiding the midpoint for FY22 revenue below consensus.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a higher note while markets in South Korea and India were closed for holidays. Japan’s Nikkei: +1.2% Hong Kong’s Hang Seng: +0.2% China’s Shanghai Composite: +0.8% India’s Sensex: CLOSED South Korea’s Kospi: CLOSED Australia’s ASX All Ordinaries: +0.9%.

    • In economic data:
      • China’s February Manufacturing PMI 50.2 (expected 49.9; last 50.1) and Caixin Manufacturing PMI 50.4 (expected 49.5; last 49.1). February Non-Manufacturing PMI 51.6 (last 51.1)
      • Japan’s February Manufacturing PMI 52.7 (expected 52.9; last 55.4)
      • South Korea’s February trade surplus $840 mln (last deficit of $4.83 bln). February Imports 25.1% yr/yr (expected 25.2%; last 35.3%) and Exports 20.6% yr/yr (expected 18.2%; last 15.2%)
      • Australia’s February Manufacturing PMI 57.0 (last 55.1) and February AIG Manufacturing Index 53.2 (last 48.4). February Home Loans 1.0% m/m (expected 2.0%; last 5.3%). Q4 Current Account surplus AUD12.70 bln (expected surplus of AUD14.30 bln; last surplus of AUD22.00 bln)
    • In news:
      • Japan’s Manufacturing PMI expanded for the 13th consecutive day. Taiwan Semiconductor Manufacturing Company’s VP of research & development said that the chip shortage will persist for up to three years, according to Economic Daily.
      • Japan’s Prime Minister Kishida nominated two officials for the board of the Bank of Japan.
      • The Reserve Bank of Australia left its cash rate at 0.10% and announced the end of its asset purchase program, as expected.

  • Major European indices trade on a sharply lower note. STOXX Europe 600: -1.9% Germany’s DAX: -2.6% U.K.'s FTSE 100: -1.1% France’s CAC 40: -2.9% Italy’s FTSE MIB: -2.5% Spain’s IBEX 35: -1.7%.

    • In economic data:
      • Eurozone’s February Manufacturing PMI 58.2 (expected 58.4; last 58.7)
      • Germany’s February Manufacturing PMI 58.4 (expected 58.5; last 59.8)
      • U.K.'s February Manufacturing PMI 58.0 (expected 57.3; last 57.3). January Mortgage Lending GBP5.92 bln (expected GBP4.35 bln; last GBP3.97 bln)
      • France’s February Manufacturing PMI 57.2 (expected 57.6; last 55.5)
      • Italy’s February CPI 0.9% m/m (last 1.6%); 5.7% yr/yr (expected 3.8%; last 4.8%). February Manufacturing PMI 58.3 (expected 58.0; last 58.3)
      • Spain’s February Manufacturing PMI 56.9 (expected 56.1; last 56.2)
      • Swiss February procure.ch PMI 62.6 (expected 64.0; last 63.8)
    • In news:
      • Finance ministers from the EU will hold an emergency meeting tomorrow while the International Energy Agency is holding an extraordinary meeting today.
      • February Manufacturing PMI readings from regional economies remained in expansionary territory, though most missed expectations.
      • The European Commission is proposing a tax on windfall profits of energy companies with revenue to be invested in renewable energy.

U.S. equity futures:

  • S&P 500 Futures: -36 @ 4,338
  • DJIA Futures: -272 @ 33,621
  • Nasdaq 100 Futures: -122 @ 14,116

Overseas:

  • Europe: DAX -2.6%, FTSE -1.1%, CAC -2.9%
  • Asia: Nikkei +1.2%, Hang Seng +0.2%, Shanghai Composite +0.8%

Commodities:

  • Crude Oil +5.33 @ 101.05
  • Nat Gas +0.118 @ 4.520
  • Gold +21.20 @ 1921.90
  • Silver +0.282 @ 24.648
  • Copper +0.0660 @ 4.5205