Editorial StaffHere are five things you must know for Monday, March 21:
1. Stock Futures Edge Lower As Russian Troops Near Kyiv
U.S. equity futures moved lower Monday, while the dollar gained ground against its global peers and oil prices moved sharply higher, as Russia’s attack on Ukraine intensified and talks aimed at brokering peace between Moscow and Kyiv appeared to bear little fruit over the weekend.
As Russia’s invasion, which began nearly a month ago as a “special operation” ordered by President Vladimir Putin, nears the Ukrainian capital, United Nation’s observers estimate that more than 10 million people have been displaced by the fighting, which has taken the lives of thousands of civilians as well as high-level figures in the Russian military.
However, with hopes of progress in talks between the two sides last week fading, investors are now left to ponder the impact of the war in both human and economic terms, with many retreating from risk markets and into cash and defensive positions.
Benchmark 10-year Treasury note yields held at 2.185% in overnight trading, while 2-year notes were marked at 1.986%, putting the difference between the two at around 21.5 basis points, the lowest since the pandemic trough of April 2020. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, gained 0.1% to to 98.242.
The defensive tone will take some of the steam out of last week’s rally, the strongest five-day session for the S&P 500 since November of 2020, sparked in part by the long-awaited clarity from the Federal Reserve’s interest rate hike and near-term policy path.
On Wall Street, futures futures contracts linked to the Dow Jones Industrial Average are indicating a 112 point opening bell dip while those linked to the S&P 500, which is down 6..4% for the year, are priced for a 5 point move to the downside. The tech-focused Nasdaq Composite is called 55 points lower.
2. Week Ahead: Powell Speeches In Focus As Big Rate Bets Return
Two speeches from Federal Reserve Chairman Jerome Powell, less than a week after the central bank’s first rate hike since 2018, will highlight a modest calendar of economic events this week as markets continue to track headline risk linked to the war in Ukraine.
Powell will address the National Association for Business Economics annual policy conference today at noon, with a follow-up speech Wednesday on central bank digital currencies at the Bank for International Settlements ‘Innovation Summit in Washington.
Both appearances could see Powell offering clues as to the Fed’s next move on rates, as bets on a 50 basis point hike begin to accelerate amid speculation that taming inflation may need to become more aggressive as energy prices remain elevated and supply chains labor under China’s latest Covid surge.
The CME Group’s FedWatch tool is pricing in a 41% chance of a 50 basis point hike in June, up from just 27% last week.
New home sales data Wednesday, as well as pending home sales figures on Friday, may also provide detail into the state of the U.S. housing market, a key component of consumer confidence, as the broader economy slows in the wake of the fastest inflation in forty years.
Markets will also digest a modest series of corporate earnings this week, with updates expected from Nike , Carnival Corp. , Darden Restaurants and Adobe .
3. Oil Prices Leap As EU Mulls Russia Embargo, Rebels Hit Saudi Facilities
Global oil prices climbed higher again Monday, taking U.S. crude closer to $110 per barrel, as European officials mulled an embargo on Russia exports and rebel troops attacked a key pipeline in Saudi Arabia.
With President Joe Biden set to travel to Brussels for a meeting with NATO leaders Thursday, EU Foreign Ministers are working on a new round of sanctions that could include banning purchases of Russia oil exports. Those talks, as well as drone attacks on a fuel distribution terminal in Jizan and a natural gas refinery in Yanbu by Iranian backed Houthi rebels, triggered an overnight price spike that was only tamed by ongoing concerns for softer demand in China, where Covid infections continue to accelerate.
WTI futures for April delivery rose $4.54 in overnight trading to change hands at $109.24 per barrel while Brent contracts for May were last seen $3.89 higher at $111.84 per barrel.
4. Boeing Shares Slump Following 737 Crash In China
Boeing shares slumped lower in pre-market trading following the crash of a 737-800 passenger jet operated by China’s Eastern Airlines.
The six-year old plane was carrying 132 passengers, including crew, on a routine flight between Kunming to Guangzhou when it crashed into mountains in the southern region of the country, China’s Civil Aviation Authority said at around 4 am Eastern time. If fatalities are ultimately confirmed, it will be the first deadly crash of a commercial plane in China since 2010.
The incident could also add further delays to Boeing’s return of the grounded 737 MAX aircraft in China, the world’s biggest market, as investigators probe the circumstances behind Monday’s disaster .
Boeing shares were marked 7% lower in pre-market trading to indicate an opening bell price of $179.44 each.
5. Disney Closes Shanghai Theme Park As Covid Cases Surge
Walt Disney shares edged lower in pre-market trading after the media and entertainment group closed its Shanghai Disney resort amid a record surge in Covid infections in China’s second-largest city.
Shanghai reported 734 local asymptomatic infections, which it does not count as “confirmed”, as well as 24 new domestically transmitted Covid infections Sunday, marking the fourth consecutive day of increases in the financial hub on the East China Sea.
Disney said in a Sunday statement that it will temporarily close the main resort, as well as Shanghai Disneyland, Disneytown and Wishing Star Park, “due to the current pandemic situation”.
“We will continue to monitor the pandemic situation and consult local authorities, and will notify guests as soon as we have a confirmed date to resume operations,” the company added.
Disney shares were marked 0.22% lower in pre-market trading to indicate an opening bell price of $140.00 each.
This article was originally published by TheStreet.
