Here are five things you must know for Monday, March 7:
1. — Stock Futures Tumble As Russia-Ukraine War Intensifies, Oil Prices Surge
U.S. equity futures slumped lower Monday, while oil prices surged to the highest levels in more than a decade, as Russian forces continue to pound targets in Ukraine, while possibly preparing for an assault on the capital Kiyv, and world leaders extend discussions on banning crude imports from Moscow.
Russia’s offensive into its eastern European neighbor, a move that has drawn nearly unanimous condemnation from world leaders, continued into its second week Monday as Vladimir Putin offered so-called “humanitarian corridors” to transport an estimated 1.5 million refugees from pulverised cities in the eastern region of Ukraine.
The offer was dismissed as ‘immoral’ by Kyiv, however, as officials warned it could be a precursor to an all-out assault on the capital later this week.
Talks aimed at banning the import of Russia’s 5 million barrels of daily crude output, alongside concerns over supply disruption and the delay of nuclear talks between the U.S. and Iran, sent oil prices soaring again Monday, adding even further upward pressure on food and commodity prices as inflation rates hold at the highest levels in four decades.
In Europe, stocks were a sea of red, with Germany’s DAX performance index falling 4.21% on the session and taking the benchmark into bear market territory. Britain’s FTSE 100 was down 2.08%, with support coming from energy and mining companies, while the region-wide Stoxx 600 fell 3.23% to a 52-week low of 408.32 points.
In the U.S. the CBOE’s VIX volatility gauge surged another 17.6% to 35.83 points in overnight trading, setting up another wild session on Wall Street as markets track both headlines from the Russian invasion and reports of a potential ban on crude imports over the course of the day.
Futures contracts linked to the Dow Jones Industrial Average are priced for a 460 point opening bell decline, a move that would take the average to its lowest levels in nearly a year, while those linked to the S&P 500, which is down 9.18% for the year, are priced for a 60 point retreat.
Nasdaq Composite futures are indicating a 210 point slump for the tech-focused benchmark as 10-year Treasury note yields fell to 1.739% in overnight trading.
2. — Oil Tops $125 On Russian Ban Talks; Gas Prices Blast Past $4 a Gallon
Global oil prices surged to the highest levels since the financial crisis Monday, with Brent crude briefly testing $140 per barrel, as world leaders extended talks on banning crude imports from Russia following last week’s invasion of Ukraine.
House Speaker Nancy Pelosi told lawmakers Sunday that Congress would be “exploring strong legislation” to ban Russian crude imports, although the total is only around 3% of U.S. consumption and wouldn’t likely impact global markets if that were done on a stand-alone basis. However, with Japan, the European Union and other western allies ready to follow suit, weekend prices surged in anticipation of the removal of Russia’s 5 million barrels from global markets.
Delays in talks between the U.S. and Iran linked to Tehran’s nuclear program also added upward price pressures, with investors now focused on any near-term reaction from Saudi Arabia and other OPEC members, who only last week held their monthly output increase to 400,000 barrels per day following a meeting in Vienna.
WTI futures for April delivery were marked $8.52 higher at $124.19 per barrel while Brent contracts for the same month surged $8.39 to $126.47 per barrel, the highest in more than a decade.
Average U.S. gasoline prices, meanwhile, topped $4 a gallon for the first time since 2008 last week, and are now within touching distance of the all-time high of $4.103, according to the consumer website Gasbuddy.com
3. — Week Ahead: February Inflation Data In Focus
The recent, and nearly unprecedented, rally in global crude prices, alongside the strongest year-to-date gains for broader commodity prices in more than a century, has further stoked inflation concerns ahead of Thursday’s February inflation reading and the start of the ‘quiet period’ heading into the next Federal Reserve rate decision.
Analysts are expecting a headline inflation rate of 7.9%, the highest since the early 1980s, when the data is published at 8:30 am Eastern time, a level that could continue to accelerate well into the second half of the year if crude and commodity prices remain elevated.
The data highlights a quite week for corporate and government releases, with just 7 S&P 500 companies reporting December quarter earnings to close out a season where profits rose 32% to a collective $463.7 billion.
However, with that pace expected to slow to just 6.2% over the three months ending in March, and surging inflation set to sap purchasing power and stifle investment, growth concerns are rising just as fast as inflation worries heading into this month’s Fed meeting, and will challenge the market consensus that Chairman Jerome Powell and his colleagues will commit to a series of rate hikes in order to tame consumer prices., for fear of tipping the economy into recession.
4. — American Express Joins, Visa, Mastercard in Cutting Off Russian Access
American Express (AXP) – Get American Express Company Report became the latest U.S. company to sever business suspend its business in Russia over the weekend in protest over its invasion of Ukraine, joining rivals PayPal Holdings (PYPL) – Get PayPal Holdings, Inc. Report, Visa (V) – Get Visa Inc. Class A Report and Mastercard (MA) – Get Mastercard Incorporated Class A Report in severing ties with Moscow.
Amex cards will no longer work in Russia, and cards issued by Russian banks will only work inside the country, the company said, “in light of Russia’s ongoing, unjustified attack on the people of Ukraine.”
The decision followed a similar move by Visa and Mastercard on Saturday which drew praise from President Joe Biden during a call with Ukraine President Volodymyr Zelenskiy.
American Express shares were marked 2.5% lower in pre-market trading to indicate an opening bell price of $168.63 each. Visa shares slumped 2.55% to $195.20 each while Mastercard fell 3.06% to $24.04 each.
5. — Apple Readies ‘Peek Performance’ Event
Apple (AAPL) – Get Apple Inc. Report shares moved lower Monday, but largely in-line with broader markets, ahead of the tech giant’s first product event of the year this week that is likely to include product updates and a price cut for the iPhone SE.
Dubbed “Peek Performance”, the Tuesday event from Apple’s Cupertino campus, set for 1:00 PM Eastern time, is expected to unveil a 5G-friendly iPhone SE, an new iPad Air and a new Mac laptop, each powered by Apple’s new in-house A15 microchip.
The virtual event also follows Apple’s decision to suspend product and service sales in Russia — including ApplePay — while removing state-backed media outlets Sputnik and RT News from its app store.
Apple employees were also told that they’re expected to return to the office on April 11, more than two years after they were asked to work from home at the start of the coronavirus pandemic.
Apple shares were marked 1.94% lower in pre-market trading to indicate an opening bell price of $160.00 each.