Morning: Worrisome developments in Russia-Ukraine conflict send futures lower

Education Blogs
1

The S&P 500 futures are down 39 points and trade 0.9% below fair value following some negative-sounding developments on the Russia-Ukraine situation. The benchmark index enters the session up 6.6% from last Thursday’s low.

Briefly, President Putin put Russia’s nuclear forces on high alert in response to further involvement/sanctions from the West. Several countries, including the U.S., announced they will block selected Russian banks from using the SWIFT messaging system, although banks involved in energy will not be removed.

Russia closed its stock market today, and its central bank increased rates to 20% from 9.5% to help protect its beleaguered ruble currency. Ukraine President Zelensky has expressed skepticism regarding the outcome of planned talks with Russia today.

Crude futures are back above $95 per barrel ($95.77, +4.14, +4.5%), and the threat of nuclear action has contributed to safety trades in Treasuries, gold ($1909.10, +21.50, +1.1%), and the dollar (96.95, +0.34, +0.4%).

The 10-yr yield is down seven basis points to 1.92%, and the 2-yr yield is down nine basis points to 1.50%.

On the data front, investors will receive Advance International Trade in Goods, Retail Inventories, and Wholesale Inventories for January at 8:30 a.m. ET, followed by the Chicago PMI for February (Briefing.com consensus 62.0) at 9:45 a.m. ET.

In U.S. Corporate news:

  • First Horizon (FHN 24.06, +5.81): +31.8% after agreeing to be acquired by TD Bank (TD 82.19, -0.24, -0.3%) for $13.4 billion, or $25.00 per share, in cash.
  • Renewable Energy Corp. (REGI 60.22, +16.41): +37.5% after agreeing to be acquired by Chevron (CVX 140.99, +0.61, +0.4%) for $3.15 billion, or $61.50 per share, in cash.
  • Healthcare Realty (HR 26.65, -2.70): -9.2% after agreeing to combine with Healthcare Trust of America (HTA 29.51, -1.53, -4.9%) in a transaction with a total enterprise value of $17.6 billion.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly higher note. Japan’s Nikkei: +0.2% Hong Kong’s Hang Seng: -0.2% China’s Shanghai Composite: +0.3% India’s Sensex: +0.7% South Korea’s Kospi: +0.8% Australia’s ASX All Ordinaries: +0.7%.

    • In economic data:
      • Japan’s January Industrial Production -1.3% m/m (expected -0.7%; last -1.0%). January Housing Starts 2.1.% yr/yr (expected 1.7%; last 4.2%) and Construction Orders 11.0% yr/yr (last 4.8%)
      • Australia’s Q4 Company Gross Operating Profits 2.0% qtr/qtr (expected 3.0%; last 4.0%). January Housing Credit 0.7% m/m (last 0.7%) and Private Sector Credit 0.6% m/m (expected 0.7%; last 0.8%). January Retail Sales 1.8% m/m (expected 0.4%; last -4.4%)
      • New Zealand’s February ANZ Business Confidence -51.8 (last -23.2)
    • In news:
      • Shares of Chinese payment processors rallied after officials from the U.S. and EU agreed to block some Russian banks from the SWIFT payment system.
      • A researcher from China’s Everbright Bank said that the liquidity in the financial system is expected to remain ample in March.
      • Some Chinese state-run banks have reportedly lowered their minimum down payment requirement for first time buyers to 20% from 30%.
      • The South Korean government will stop enforcing the use of vaccine passports tomorrow.

  • Major European indices trade in the red as sentiment remains pressured. STOXX Europe 600: -1.4% Germany’s DAX: -2.1% U.K.'s FTSE 100: -1.0% France’s CAC 40: -2.8% Italy’s FTSE MIB: -2.7% Spain’s IBEX 35: -1.1%.

    • In economic data:
      • Spain’s February CPI 0.6% m/m (last -0.4%); 7.4% yr/yr (expected 7.1%; last 6.1%). December Current Account deficit EUR1.31 bln (last surplus of EUR1.01 bln)
      • Swiss Q4 GDP 0.3% qtr/qtr (expected 0.4%; last 1.9%); 3.7% yr/yr, as expected (last 3.8%). January Retail Sales 5.1% yr/yr (expected 0.4%; last -0.5%) and February KOF Leading Indicators 105.0 (expected 108.5; last 107.8)
    • In news:
      • Officials from the EU and the U.S. agreed to block some Russian banks from the SWIFT payment system over the weekend.
      • BP sold its 20% stake in Rosneft.
      • The Central Bank of Russia raised its key rate to 20.0% from 9.0% and the U.S. dollar has rallied more than 10.0% against the Russian ruble.
      • Negotiators from Russia and Ukraine are meeting today.

U.S. equity futures:

  • S&P 500 Futures: -44 @ 4,340
  • DJIA Futures: -295 @ 33,769
  • Nasdaq 100 Futures: -152 @ 14,037

Overseas:

  • Europe: DAX -2.1%, FTSE -1.0%, CAC -2.8%
  • Asia: Nikkei +0.2%, Hang Seng -0.2%, Shanghai Composite +0.3%

Commodities:

  • Crude Oil +3.29 @ 94.80
  • Nat Gas +0.083 @ 4.553
  • Gold +24.60 @ 1912.20
  • Silver +0.135 @ 24.440
  • Copper +0.0320 @ 4.5170
2 Likes