(ABM FN-Dow Jones) European stocks are set to open lower on Tuesday, with investors closely monitoring developments around Ukraine and Russia.
IG foresees an opening loss of 205 points for the German DAX, a minus of 68 points for the French CAC 40 and a fall of 57 points for the British FTSE 100.
Russian President Vladimir Putin recognized Donetsk and Luhansk in Ukraine as independent people’s republics on Monday evening, despite the West’s threats of severe sanctions. He is also sending troops to these regions for a ‘peace mission’.
“This move is a flagrant violation of both international law and the Minsk agreements,” said Commission President Ursula von der Leyen and Council President Charles Michel.
“The Union will respond with sanctions against those involved in this illegal act,” the two added.
The United States is also coming up with sanctions. President Joe Biden, for example, has now banned American companies from doing business with Donetsk and Luhansk and new campaigns would soon follow.
Monday already red
Stock markets in Europe ended well in the red on Monday.
“Markets are finding it increasingly difficult to price in geopolitical risk,” said Edward Park, chief investment officer at Brooks Macdonald.
Market analyst Michael Hewson of CMC Markets also sees that European markets are currently sensitive to any news about the situation in Ukraine and expects this to remain so for some time to come.
A meeting is scheduled for later this week between US and Russian foreign ministers, provided Moscow does not invade Ukraine before then. Preparations may then be made for a meeting between Presidents Biden and Putin.
Meanwhile, Russia says it has killed several ‘saboteurs’ who tried to enter Russian territory with military vehicles from Ukraine. Ukraine says it has no troop presence in the region or plans to carry out an attack on Russia and claims that Moscow is deliberately lying in order to provoke a reaction from Kiev, which would “justify” a military invasion.
Furthermore, the leaders of the so-called People’s Republics of Donetsk and Luhansk have asked Putin to recognize them as independent countries. Putin said Monday he was considering this. Russia’s parliament, the State Duma, voted in favor of recognition last week.
Stock markets in Europe started the trading day cautiously optimistic on Monday on the news of a possible meeting between Putin and Biden. The stock market in Moscow eventually fell more than 10 percent.
Volumes were lower as Wall Street was closed Monday for President’s Day celebrations.
On a macroeconomic level, attention was paid to purchasing data from Japan, the United Kingdom and the eurozone for the month of February. In Japan, the industry and services sector contracted, while in the UK the services sector recovered strongly. In the eurozone, economic activity in the services sector increased, but weakened in manufacturing.
Chris Williamson pointed to the widespread supply chain disruptions leading to delays and higher prices. At the same time, higher energy and labor costs are creating inflationary pressures, “which means that selling prices have not risen as fast as in the past quarter,” said Markit’s economist.
The Bundesbank is also concerned about high inflation, the monthly report from the German central bank showed on Monday. Consumer prices in the eurozone’s largest economy rose sharply again at the start of 2022, despite the repeal of a cut in VAT rates. This has been one of the factors driving high inflation in Germany and the Eurozone in recent times.
The Bundesbank points to rising energy prices as the cause and is counting on inflation in Germany to remain at a high level in the coming months. The outlook for the economy is also good.
Company news
There were hardly any winners in the German DAX. Only Siemens Healthineers managed to finish lightly in the green. Porsche and Continental lost about 3 to 4 percent.
In the CAC 40, only Eurofins Scientific finished in green, with a plus of more than one percent. Teleperformance lost more than 5 percent.
Worldline has reached an agreement with Apollo Funds on the sale of its Terminals, Solutions & Services division for a total amount of EUR 2.3 billion. The stock fell about 3 percent in Paris.
Diageo has started buying back £1.7 billion in its own shares. Diageo, as previously announced, wants to return £4.5 billion to shareholders through share buybacks. This program is to be completed in fiscal year 2023. The stock lost more than half a percent in London.
Credit Suisse also fell 3 percent in Zurich. Leaked data from the Swiss bank shows that for years criminals and corrupt politicians were customers.
Kinepolis received several price target increases and rose almost 1.5 percent in Brussels.
Euro STOXX 50 3,981.60 (-2.3%)
STOXX Europe 600 454,81 (-1,3%)
DAX 14.731,12 (-2,1%)
CAC 40 6,788.34 (-2.0%)
FTSE 100 7,484.33 (-0.4%)
SMI 11,891.88 (-1.0%)
AEX 729,73 (-2,0%)
BEL 20 3,969.13 (-1.9%)
FTSE MIB 26.050,03 (-1,7%)
IBEX 35 8.488,90 (-1,2%)
US EQUITIES
US futures predict a slightly higher open on Tuesday.
US stocks were closed Monday for President’s Day. Wall Street closed lower on Friday on lingering concerns about a Russian attack on Ukraine. Faster monetary tightening by the Federal Reserve is also on the minds of investors.
The oil price lost ground despite geopolitical concerns. Investors fear a surge in Iranian oil as steps are taken to revive the 2015 nuclear deal.
The earnings season in the US is past its peak, but there are still some interesting results coming later this week. On Tuesday afternoon it will be the turn of Macy’s and Home Depot and Moderna, Nikola and Beyond Meat, among others, will open the books this week.
On a macroeconomic level, the focus will be on purchasing data for the US manufacturing and services sector on Tuesday, followed by new growth figures and the important PCE inflation for the Fed later in the week.
S&P 500 index 4,348.87 (-0.7% – closing position Friday)
Dow Jones index 34,079.18 (-0.7% – closing position Friday)
Nasdaq Composite 13,548.07 (-1.2% – Friday closing)
ASIA
Asian stocks were sharply lower on Tuesday.
Nikkei 225 26.452,72 (-1,7%)
Shanghai Composite 3.442,50 (-1,4%)
Hang Seng 23,398.53 (-3.2%)
EVALUATE
The euro/dollar was trading at 1.1303 this morning. At the close of European markets on Monday, the currency pair moved at 1.1338.
USD/JPY Yen 114,72
EUR/USD Euro 1,1303
EUR/JPY Yen 129,68
MACRO-AGENDA:
00:00 Prices existing owner-occupied homes – January (NL)
10:00 Ifo Business Confidence – February (Germany)
15:00 Business confidence – February (Call)
15:45 Composite Purchasing Managers Index – January (US)
COMPANY NEWS:
13:00 Home Depot – US Fourth Quarter Figures
13:00 Macy’s – US Fourth Quarter Figures
18:00 ASMI – Fourth Quarter Figures
Bron: ABM Financial News
From Beursplein 5, the editors of ABM Financial News keep a close eye on developments on the stock exchanges, and the Amsterdam stock exchange in particular. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.
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