(ABM FN-Dow Jones) European stocks are set to face a mostly lower open on Wednesday as fighting intensifies in Ukraine.
In his State of the Union address, US President Joe Biden said last night that Russian President Vladimir Putin has isolated himself from the rest of the world more than ever with the invasion of Ukraine. Biden also emphasized high inflation, citing higher domestic production of cars and semiconductors and renovation of roads, bridges and other infrastructure as the best medicine for this phenomenon.
IG Markets forecast an opening loss of 49 points for the German DAX, a 20-point loss for the French CAC 40 and a 23-point increase for the British FTSE 100.
European stocks closed lower on Tuesday, with investors still fixated on Russia’s isolation from the economic system following its invasion of neighboring Ukraine.
The Moscow stock exchange was closed for the second day in a row, by order of the Russian central bank, after the United States banned transactions with the Moscow stock exchange.
The war raged again in Ukraine on Tuesday, with bombing raids on the country’s second city, Kharkiv. Russia also announced rocket attacks on the capital Kyiv.
Investment manager Simon Wiersma of ING saw banks in particular under pressure on the European stock exchanges. “The closing of Russian banks from the SWIFT payment system and the lower interest rates are the main reason for this,” said Wiersma.
The oil price rose very sharply.
Various media reported that the International Energy Agency will use 60 million barrels of oil from strategic stocks to curb high oil prices.
In the afternoon there were economic data, including on German inflation and the purchasing manager indices for the US industry. During a military conflict, however, this kind of news usually fades into the background, Rabobank’s Stefan Koopman said on Monday.
In Europe, as in the US, purchasing managers’ indices showed accelerating growth, except in Germany, as a result of which the eurozone also showed no improvement. Inflation in Germany rose to 5.1 percent in February, as expected, from 4.9 percent in January. Consumer prices were 0.9 percent higher than a month earlier.
Company news
Banks suffered very heavy price losses, with ING falling 11 percent and BNP Paribas 7 percent. Austria’s Raiffeisen, one of the largest banks in Eastern Europe, lost about 10 percent. According to Reuters news agency, Raiffeisen would like to leave Russia.
German car manufacturers were also out of favor. Volkswagen lost 8 percent and Mercedes-Benz almost 6 percent.
Although the earnings season is coming to an end, it was still busy in Germany in the morning. Beiersdorf saw revenue and profit pick up in 2021. The stock closed 3 percent higher. Bayer saw its turnover increase in 2021 in line with expectations and the results also improved. However, the share price fell 5 percent.
Zalando grew strongly again in 2021. However, the stock plunged 9.5 percent.
Shell is exiting its joint ventures with Russia’s Gazprom in response to the Russian invasion of Ukraine. And TotalEnergies announced that it would no longer invest in new projects in Russia. Shell closed 0.7 percent lower, TotalEnergies 2.7 percent.
Thales gained 5 percent, thanks to defense exposure. Defense stocks were also in demand on Monday.
Euro STOXX 50 3,765.85 (-4.04%)
STOXX Europe 600 442,37 (-2,4%)
DAX 13.904,85 (-3,9%)
CAC 40 6,396.49 (-3.9%)
FTSE 100 7,330.20 (-1.7%)
SMI 11,862.28 (-1.04%)
AEX 713,46 (-2,23%)
BEL 20 3,937.92 (-1.90%)
FTSE MIB 24.363,56 (-4,14%)
IBEX 35 8.188,20 (-3,43%)
US EQUITIES
Wall Street opens in the plus on Wednesday, according to US futures.
US stocks closed sharply lower on Tuesday after Russia stepped up its military attack on Ukraine and the price of oil rose sharply.
On Monday, western countries began blocking access by some Russian banks to the international messaging system SWIFT, making payment transactions with those banks more difficult.
On Tuesday, Russia intensified its missile attack on Kharkiv, Ukraine’s second largest city. The two countries are still negotiating a ceasefire, but have made no progress.
“The Russia-Ukraine situation is clearly driving the markets,” said Randy Frederick of Charles Schwab. Investors are buying US Treasuries as a flight to safety, he said.
The yield on the ten-year Treasury fell by 13 basis points to 1.71 percent due to this buying frenzy. Before the invasion of Ukraine, interest rates had risen to 2 percent.
“Financials are taking a hard hit as the 10-year falls sharply today,” Frederick said of returns, noting that financials often benefit from rising returns.
American Express lost 8.5 percent and JPMorgan Chase 3.8 percent.
Meanwhile, the war continued. Moscow is deploying heavier equipment, witness a large convoy of military vehicles moving towards the Ukrainian capital Kyiv. “Investors fear that Russia has gone too far to be able to backtrack,” said Fawad Razaqzada of Think Markets.
President Joe Biden will also give his annual State of the Union address in the night from Tuesday to Wednesday Dutch time. Given recent geopolitical developments, this could turn out to be a very important one, according to market experts.
The price of oil shot up 8 percent to well above $100 a barrel. More and more oil companies are cutting ties with Russia and market experts fear that an already tight supply will be made even tighter by sanctions against Russia or production problems due to the war.
OPEC+ will meet on Wednesday to discuss the existing agreements. No changes are expected for the time being.
In the afternoon there were economic data, including on German inflation and the purchasing manager indices for the US industry. Both Markit and ISM reported an acceleration of US industry growth in February. During a military conflict, however, this kind of news usually fades into the background, Rabobank’s Stefan Koopman said on Monday.
Company news
Disney will stop releasing new content in Russia for the time being. FedEx and UPS previously reported that they would no longer deliver packages in the country. The stock fell 1.9 percent.
DoorDash takes over the ordering and payment system Bbot, without reporting financial details. The stock lost 2.4 percent.
Chevron held an investor day and increased its share buyback to $5 to 10 billion, instead of 3 to 5 billion. The share climbed 4 percent.
Tech company Baidu delivered mixed results in the quarter, with sales better than expected but profit falling short. The stock gained 7 percent.
Target saw revenue and profit increase in the fourth quarter and met its full fiscal year margin target. In the outlook, the department store chain warned of the necessary volatility. The stock rose 10 percent.
The American department store Kohl’s recorded more sales in the fourth quarter, while earnings per share fell less sharply than expected. Nothing new was announced on Tuesday about the possible takeover by hedge fund Starboard. The stock rose 2 percent.
S&P 500 index 4.306,26 (-1,55%)
Dow Jones index 33.294,95 (-1,76%)
Nasdaq Composite 13.532,46 (-1,59%)
ASIA
Asian stocks traded broadly lower on Wednesday.
Nikkei 225 26.431,97 (-1,5%)
Shanghai Composite 3.478,33 (-0,3%)
Hang Seng 22,492.72 (-1.2%)
EVALUATE
The euro/dollar traded at 1.1115. When the US markets closed on Tuesday, the currency pair still moved at 1.1128 and at the close of the European markets there was still 1.1118 on the plates.
USD/JPY Yen 115,08
EUR/USD Euro 1,1115
EUR/JPY Yen 127,90
MACRO-AGENDA:
03:00 State of the Union (VS)
09:55 Unemployment – February (Ger)
11:00 Inflation – February vlpg (eur)
11:00 Producer Awards – January (eur)
13:00 Mortgage Applications – Weekly (US)
14:15 ADP Jobs Report – February (US)
16:00 Hearing Powell on Fed monetary policy in AUAS (US)
16:30 Oil Stocks – Weekly (US)
20:00 Federal Reserve – Beige Book (VS)
00:00 OPEC+ . Meeting
COMPANY NEWS:
13:00 Kroger – US 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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