Morning Minutes

Ruble Wrecked, Stocks Smashed as a Busy Week for Market News Begins

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The war in Ukraine continued through the weekend with reports of more fighting and more sanctions offset by the possibility of initial peace talks. The situation remains volatile as has action across global markets. Dow futures have been trading down between 300 and 500 points since futures trading reopened last night and are currently down about 380 points or 1.1%. S&P futures and NASDAQ futures are both down about 1.2%, giving back a chunk of Friday’s respective gains of 2.2% and 1.6%.

Overseas market action has been mixed. In Asia, the Nikkei gained 0.2% and the Hang Seng slipped 0.2%, while the resource sensitive Australian market rallied 0.75%. In Europe, however, stocks are sliding again with the Dax down 1.8% and the FTSE down 1.0%.    

Action in commodity, bond and currency markets indicates capital continues to highlight flows toward more defensive stances. With its banking system increasingly coming under sanctions, Russia’s Ruble has plunged 30% overnight and its central bank raised its benchmark rate to 20.0% from 9.5% amid the crisis. The Euro is down 0.6% against the US Dollar. Gold is up 1.3% and trading back above $1,900/oz. The US 10-year treasury note yield has slipped back toward 1.9% indicating continued interest in US bonds. Crude oil is soaring again today, especially WTI crude which is up 3.9% and trading back above $95.00/bbl, while Brent crude is up 2.1% and sitting on $100.00/bbl, and copper is up 0.6%.

February, a short month to begin with, has flown by and comes to an end today. It’s a busy week for economic news starting with today’s Chicago PMI report (street 63.0 vs previous 65.2), followed by manufacturing and service PMI reports from around the world Tuesday and Thursday respectively plus US ADP and Nonfarm payrolls Wednesday and Friday respectively.

The Bank of Canada meets on Wednesday with the street expecting a 0.25% interest rate hike. The last major data points before the meeting, February industrial prices (3.0% vs street 0.4% and previous 0.7%), and raw material prices (6.5%  vs street -0.2% and previous -2.9%) jumped more than expected, indicating inflation pressures continue to rise heading into the big decision.

It’s another big week for earnings as well. Canadian bank earnings season continues with Bank of Montreal and Bank of Nova Scotia reporting Tuesday, followed by TD Bank on Thursday. Retailer earnings continue to roll out from the US but Tuesday also brings a potentially interesting comparison of the stay-at-home economy beneficiaries versus companies who could benefit from a reopening economy with Zoom Communications and AMC Theaters both set to report results.  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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