By Geoffrey Smith
Investing.com -- Global markets brighten up on first signs of compromise from the Russian and Ukrainian governments (but the fighting goes on, regardless). Apple (NASDAQ:AAPL) moves into the market for high-end desktops, at the same time as relaunching its cut-price iPhone SE. Nickel trading remains halted as a major Chinese producer faces an $8 billion loss. Russia's central bank bans foreign currency sales, pushing the ruble lower again. The Labor Department publishes its monthly job openings survey and U.S. oil inventory data will show the impact of record-high gasoline prices. Here's what you need to know in financial markets on Wednesday, 9th March.
1. Markets up on signs of diplomatic shift in Russia, Ukraine
The mood in global markets brightened after Russia’s Foreign Ministry spokeswoman Maria Zakharova said Russia has no intention of occupying Ukraine or overthrowing its government, a clear step away from its previous position of wanting to ‘de-Nazify’ the country.
The comments came a day after Ukraine’s democratically-elected (and Jewish) President Voldymyr Zelensky said he had “cooled” on the idea of joining NATO, the prospect of which was a prime factor behind Russia’s invasion.
European stock markets rose as much as 5%, while the euro rebounded 0.8% to $1.0985 by 6:15 AM ET (1115 GMT).
As ever, diplomatic rhetoric shifts according to its audience, and is often at odds with events. Zakharova also said that Russia’s actions aren’t aimed at Ukraine’s peaceful population – despite widespread evidence of repeated shelling of refugees trying to flee through 'safe' corridors it had guaranteed. Zelensky, meanwhile, told the British parliament that Ukraine would fight on “to the end” on Tuesday.
2. Russian economic crisis worsens as exodus continues, central bank restricts stops FX sales
Russia’s economy continues to lurch into chaos. The Central Bank late on Tuesday stopped banks from selling foreign currency for six months, a move that suggests it expects the current sanctions regime to last at least that long. The dollar rose another 12% on local exchanges to 118.07 rubles.
Vladimir Putin signed a decree late on Tuesday restricting the export of raw materials, in an attempt to appear still in control of an economic situation largely driven by external forces. The U.S. and U.K. both said they will ban Russian oil imports on Tuesday, while the EU outlined plans to cut its imports of Russian gas by two-thirds within a year.
The list of private companies exiting Russia continued to lengthen: McDonald’s (NYSE:MCD) and Yum! Brands (NYSE:YUM), the owner of KFC and Pizza Hut, both said they will suspend operations. Coca-Cola (NYSE:KO), PepsiCo (NASDAQ:PEP) and Starbucks (NASDAQ:SBUX) have all done the same within the last 24 hours.
3. Stocks set to open higher; Apple, JOLTS eyed
U.S. stock markets are set to join the global bounce later, with dip-buying trading algorithms making the most of the shift in sentiment.
By 6:15 AM ET, Dow Jones futures were up 468 points, of 1.4%, while S&P 500 futures were up 1.7% and Nasdaq 100 futures were up 2.0%. That’s considerably more than what they lost on Tuesday.
Stocks likely to be in focus later include Apple, which announced plans to expand in the high-end desktop computer market late on Tuesday, offsetting some fears about cannibalization of its iPhone business with the relaunch of its iPhone SE product. Also in focus will be electric vehicle makers, as the consequences of the turmoil in nickel futures continue to ripple through markets. Oatly is arguably the most interesting of the few companies reporting earnings, while Adidas’ figures released earlier went some way to making up for recent volatility.
The Labor Department's monthly job openings survey leads a thin data calendar.
4. Nickel market remains shut as Chinese producer faces $8 billion loss
Nickel trading remained closed in both Shanghai and London as the two exchanges made slow progress in unwinding the massive loss-making short position held by Tsingshan, a Chinese nickel producer.
Tsingshan faces losses of some $8 billion on its position, according to various reports.
The London Metals Exchange has been fiercely criticised for its decision to cancel some trades made earlier in the week, which it said was due to the threat to the viability of some its members.
“The ability of the financial system to get that money to the members in London and then into the exchange I think would have been significantly stressed,” LME CEO Matt Chamberlain told Bloomberg.
5. Oil eases off highs; U.S. inventories eyed
Crude oil prices eased off recent highs, in a further reflection of the slight improvement in global market sentiment.
By 6:20 AM ET, U.S. crude futures were down 2.3% at $120.92 a barrel, while Brent futures were down 1.7% at $125.75 a barrel.
The upward pressure on oil has also been relieved by realizations that the ban announced by the U.S. and U.K. on Russian oil imports will have a largely symbolic character, owing to the small volumes affected. U.S. imports from Russia were running at less than 100,000 barrels a day so far this year, according to government data.
The U.S. publishes inventory data at 10:30 AM ET, where the key variable will be what impact record-high pump prices are having on gasoline demand.