US open: Markets jittery as Russia, Ukraine tensions build

US futures

Dow futures +1.3% at 33986

S&P futures +1.8% at 4338

Nasdaq futures +1.72% at 13927

In Europe

FTSE +0.35% at 7503

Dax -0.1% at 14700

Euro Stoxx -0.05% at 3983

 

Russia dominates the headlines

US stocks are set for a stronger start after the long weekend, as investors continue digesting the latest Russia, Ukraine headlines. Russia has recognized the independence of two separatist occupied regions in Ukraine and has sent Russian troops into these regions on peacekeeping mission, according to Moscow.

The West have started to hand out sanctions in response to Russia’s moves. Whilst risk sentiment crashed in early European trades, the recovery in indices and the stronger start expected on the US stock market suggests that the market has already priced in these moves in a sell the rumor buy the fact trade. Should we see any real de-escalation sock prices could pop higher quickly.

Looking ahead US PMIs could grab attention from eastern Europe, even if for a few brief minutes. The PMIs will be the first real insight into economic actibvitty in the US as it moves away from Omicron. Expectation are for the services PMI to edge higher to 53. However, if the impressive prints in the UK and Europe are anything to go buy a big beat could be on the cards

In corporate news:

Macy’s trades over 7% higher pre-market after impressive Q4 sales. The key holiday period saw the retailer report a 28% jump in same store sales compared to the same period last year.

Home Depot is set to fall around 2% on the open despite quarterly profits and revenues beating Wall Street’s estimates. EPS came in a $3.21, and a 15% dividend was also announced.

Where next for the Dow Jones?

The Dow Jones has been trending lower from resistance at 35870 reached 8^th February. The price fell below the 50 & 100 sma and trades below its falling trendline, hitting a low of 33480 at which point buyers re-entered pushing the price higher, the long lower wick suggests that here wasn’t much acceptance at that lower level. The move higher also brought the RSI out of oversold territory on the 4-hour chart. Support can be seen at 33750 yesterday’s low, ahead of 33480 today’s low, with a move below here opening the door to 33225 the 2022 low. Buyers will be looking to re-take 34300 February 14 low ahead of 34550 the falling trend line resistance.

FX markets USD falls, EUR rises

USD trades lower as risk sentiment is improving suggesting that Russia’s latest moves have already been pr iced into the market

EUR/USD trades firmly high back over 1.1350 as the market mood improves. Stronger than expected German IFO business sentiment has helped boost the common currency. German IFO rose to 98.9 in February, well ahead of the 96 recorded in January.

Oil rises to fresh 7 year high, then falls

Oil prices rose to a fresh 7 year high, before easing lower in volatile trade. As Russia sent troops into part of Ukraine fears of supply disruption lifted oil prices to a level last seen in 2014. Germany has halted approval of the gas pipeline Nord Stream 2 which could see gas prices surge and take the whole energy complex as well.

As fears of war rise, the potential for oil to rise to $100 has grown.

Separately talks between the US and Iran to revive the nuclear deal are ongoing. Progress here could eventually see 1 million bpd released back into the market.

Expect volatility in the price of oil to continue.

WTI crude trades -1.2% at $92.50

Brent trades +0.3% at $94.90

 

 

Looking ahead

14:45 Manufacturing and services PMI