- STOXX down 2%
- Ukrainian jitters persist
- Weak profits also weigh
- US stock futures fall
MARKETS LIVE Crude surge fails to lift European oil inventories
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CRUDE SURGE DOES NOT WIN EUROPEAN OIL STOCKS (1209 GMT)
The rise in crude prices did not give a new boost to the oil sector that some traders had seen as a possible hedge against an escalation of the conflict in Ukraine.
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Although oil prices rose above $100 a barrel for the first time since 2014, the sector’s close ties to Russia have reportedly stifled any major upside. Read more .
Shares of TotalEnergies fell more than 3% this morning after the French oil and gas company announced it would no longer provide capital for new projects in Russia.
This follows news this week that BP is set to sell its 20% stake in Russia’s Rosneft, while Shell revealed it would end its alliance with Gazprom. Shares of the two British oil majors have fallen around 5.7% and 2.6% respectively this week.
Eyes will be on a response from Exxon later, with pressure mounting for the US major to explain how it will handle its 30% stake in a huge offshore crude oil development in Russia. Read more
The STOXX 600 Oil & Gas Index (.SXEP) is down more than 1% so far this week, while the broader STOXX 600 (.STOXX) is down 2%.
NEW DOWNWARD PRESSURE FOR EUROPEAN BANKS? (10:40 GMT)
European banks have had a torrid time this year and things are not looking up this week as Western allies hit Russia with tough financial sanctions, prompting markets to cut bets on ECB rate hikes.
The STOXX Europe 600 Banks Index (.SX7P) has fallen more than 6% so far this week after cumulative losses of around 10% in the previous two weeks. And Citi analysts say there could be more downside ahead given market positioning.
Investors in the EuroSTOXX 50 (.STOXX50E) have been net short for several weeks and all remaining offsetting long positions are currently in loss, according to Citi, with a similar situation for European banks but with even greater losses.
Citi notes that the concentration of long positions in these indices is above long-term averages and that if unwound would likely lead to further downward pressure.
Reproduced with permission from Citi Research. Not to be reproduced.
Earlier on Tuesday, European banking stocks hit their lowest level since Dec. 21.
STOXX DIPS, VOLATILITY REMAINS HIGH (0901 GMT)
European equities started March with small losses as markets cooled somewhat after a rocky start to the week, but high uncertainty surrounding ceasefire talks between Russia and Ukraine has kept investors nervous.
As a result, a volatility gauge for eurozone stocks (.V2TX) remained above 35 points, having climbed a combined 16 points in January and February to mark its biggest two-month jump since March 2020. at the height of COVID-19 scare.
Stocks exposed to Russia tried to rebound, but overall the picture was a mixed one, showing investors still lacked conviction, while poorly received earnings updates from Flutter (FLTRF.L), Hellofresh (HFGG.DE) and Zalando (ZALG.DE) added some gloom.
The benchmark STOXX 600 index (.STOXX) was last down 0.5%.
PICK IN THE GRADIENTS (0807 GMT)
Well-known emerging markets commentator Tim Ash of BlueBay Asset Management noted that it took a week for Fortress Russia to become Rubble Russia.
Indeed, after losing a third of its value on Monday, the ruble lost another 5%. And it’s only a matter of time before Russia is ejected from the bond and stock indices read more .
Global markets are trying to make the most of it; after heavy losses, US and European stock futures are up, while safe-haven bonds and the yen are down.
The collapse of a fortress reverberates though.
There is the impact on growth and inflation of an oil price of $100. Many investors are also left with tens of billions of dollars of unsaleable Russian securities. More companies may have to follow BP to abandon Russian investments at immense cost
Tuesday’s PMI data confirmed that factory supply chains were recovering in February. But Russia’s footprint on raw materials poses a threat: apart from oil and gas, Russia produces half of the world’s palladium, 14% of platinum and 6-7% of aluminum. Aluminum prices hit a record high, with shipment disruptions reported in Ukraine.
Australia summed up the impasse in which central banks find themselves. Policymakers have noted the risks associated with the crisis, but inflation will likely force interest rates higher by mid-year read more .
Next – a Russian default? Its hard-currency debt payments total some $55 billion this year, according to Oxford Economics estimates, with sovereign bonds accounting for $2.6 billion. Without access to its $640 billion in foreign exchange reserves or its SWIFT payment systems, can Russia pay? Will he want it?
Tuesday brings a test in the form of a $417 million bond redemption from Russian telecommunications company VEON. He says he has “alternative routes” to move money. The wait is on.
Key developments that should further guide markets on Tuesday:
-Asian factory activity increases but Ukraine crisis darkens outlook
– Group of Seven finance ministers discuss Ukraine crisis.
– Germany January Retail Sales/CPI/HICP Preliminary
-US President Joe Biden delivers a State of the Union address.
-Fed Speakers: Raphael Bostic, Chairman of Atlanta
– US Profits: Baidu, Bank of Nova Scotia, Target, Autozone, Kohls, Wendy’s, Man U, Domino’s, Salesforce, Nordstrom, Urban Outfitters, First Solar
CAUTIOUS OPENING EXPECTED FOR EUROPE (07:27 GMT)
Asian stocks and U.S. stock index futures were marginally higher, but European futures pointed to a lower start on Tuesday as ceasefire talks between Russian and Ukrainian officials failed to reach a conclusion. a breakthrough.
The mood in Europe remains cautious due to its proximity to Ukraine and the expected greater economic impact of Western sanctions on Russia. Euro STOXX 50 contracts fell around 0.3% and FTSE futures fell 0.2%.
In corporate news, Shell followed BP in announcing plans to exit its Russian operations, including the Sakhalin 2 LNG project, which is expected to result in billions in write-downs.
Meanwhile, Brent crude futures rose 2% to $99.88 a barrel, but remain well below the high of $105.79 reached last week after the U.S. invasion of Ukraine. Russia.
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