Russia’s accelerating incursion in Ukraine has global markets on the defensive Tuesday, with oil prices set to test the $100 mark for the first time since 2014.
U.S. equity futures traded lower Tuesday, while oil prices raced to fresh seven-year highs and Treasury yields retreated, as global markets reacted to Russia’s provocative actions in eastern Europe that are likely to result in widespread sanctions from western leaders and escalating military tensions in the region.
Russian President Vladimir Putin said he would recognize the independent sovereignty of two breakaway republics in the Ukraine on Monday, a move that both allows him to annex the pro-Moscow territories with what he called “peacekeeping” troops while simultaneously ruining any near-term chance of negotiating a peaceful settlement in the fast-escalating dispute with Washington.
Global markets reacted in kind, with benchmark 10-year Treasury bond yields falling below the 1.90% mark in overnight trading as investors ploughed cash into safe-haven assets, while oil prices surged closer to the $100 per barrel mark on fears of disruption in natural gas supplies into western Europe and sanctions on Russia’s 10.2 million barrels in daily crude exports.
Russian Tanks In Ukraine, Oil, Retail Earnings, Trump and Elon Musk – 5 Things You Must Know
Geopolitical risks are likely to trump corporate earnings headlines this week, as well, amid a light calendar of updates and data releases highlighted by holiday quarter profits from Home Depot (HD) – Get Home Depot, Inc. Report.
Collective S&P 500 earnings are forecast to rise 31.8% from last year over the fourth quarter to a share-weighted $463.3 billion.
That growth rate is set to slow sharply, however, in the current quarter, with collective profits forecast to rise only 6.7% from last year to $435.6 billon as inflation pressures continue to mount and the Federal Reserve begins what many believe will be a multiple series of rates hikes to tame it.
Europe’s Stoxx 600 benchmark fell 1% by mid-morning trading in Frankfurt, following on from a 1.6% slump for the region-wide MSCI ex-Japan index, but recovered most of those losses as traders tracked U.S. equity futures, which were also influenced by a big jump in the CBOE’s key VIX volatility gauge, setting up for an active session on Wall Street.
WTI crude futures for April delivery were marked $2.00 higher on the session at $93.59 per barrel while Brent contract for the same month, the global benchmark, gained $2.62 to trade at $98.01 per barrel in early New York dealing.
The leap in crude prices is providing an early pre-market boost for U.S. drillers, however, with Dow components Chevron Corp (CVX) – Get Chevron Corporation Report rising 1.6% to $135.55 each and Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report gaining 1.7% to trade at $78.70 each.
Futures tied to the Dow Jones Industrial Average are indicating a 55 point opening bell decline, after falling more than 400 points in early European dealing, while those linked to the S&P 500, which is down 8.8% for the year, are priced for a 10 point retreat.
Nasdaq Composite futures are indicating a 90 point gain for the tech-focused benchmark as 10-year Treasury note yields hold at 1.897% in overnight trading.
Macy’s (M) – Get Macy’s Inc Report shares were a notable pre-market mover, rising 7.4% after posting stronger-than-expected fourth quarter earnings and boosting its dividend and share buyback plans.
Home Depot was active, as well, after topping Street earnings forecasts thanks to a big jump in average ticket sales for the home improvement retailer.
