US open: Stocks plummet as Russia invades

US futures

Dow futures -2.3% at 32390

S&P futures -2.3% at 4128

Nasdaq futures -2.8% at 13130

In Europe

FTSE -3% at 7252

Dax -5.05% at 13886

Euro Stoxx -4.7% at 3785

 

Will the Nasdaq enter a bear market?

US stocks are set to get slammed on the open as risk sentiment hits the floor. News that Russia is invading Ukraine has sparked a swift flight out of riskier assets and into safe havens.

Whilst the likes of gold, the Japanese yen and the Swiss franc are surging higher, stocks are tumbling with the Nasdaq bearing the brunt of the move.

It’s difficult to imagine that Putin will back off from here. The West are set to announce harsh sanctions which could have implications for global growth.

Moreover, the surging energy prices feed into the inflation story. With inflation at 7.5% the last thing the US needs is higher fuel prices. Maybe we will see US – Iran negotiations move faster towards the conclusion now?

On the data from US GDP was upwardly revised to 7.2% in Q4 on an annualized basis, up from 6.9%. The good news was completely ignored by investors who are focused on the broader risk sentiment story as the world faces a potential war in Europe as well as sky high inflation. There doesn’t appear much to be optimistic about currently.

Where next for the Nasdaq?

The Nasdaq continues to trend lower heading towards 20% loses from its November high, after taking out a key support at 13700. The index trades below its 50 & 100 sma and the 50 crossed below the 100 sma in a bearish signal. The RSI is supportive of further losses which it remains out of oversold territory. The selloff appears to have found some support on the 100-week sma just above the key psychological level of 13000. Sellers would need to break this level down in order to attack 12950 the May ’21 low and 12500 the March ’21 low. Buyers would need to retake 13700 to negate the near term drop before eyeing resistance at 14000.

FX markets USD rallies, EUR tumbles

USD is surging higher on safe haven flows. It appears that the USD has finally woken up to the Russian threat. The greenback had failed to pick up much is any safe haven bid over the past few weeks. The USD index trades at the highest level since January 31^st and is attempting to make a higher high.

EUR/JPY has fallen to a two-month low as the Japanese yen is supported by safe haven flows whilst the euro, which is exposed to Russia, through energy supplies to Europe, banking and trade, is trading heavily under pressure. The pair hi a low of 127.92 although has risen slightly off that level to 128.30.

GBP/USD -1.25% at 1.3372

EUR/USD -1.15% at 1.1117

 

Oil rises to $100

Oil prices are roaring higher as Russia attacks Ukraine. Fears that supplies could be disrupted by either; Western sanctions, which seems unlikely given that Europe depends heavily on Russian energy. That said the West have promised the toughest sanctions on Russia in response.

Alternatively, Russia could limit supply to Europe. Russia is the third largest oil supplier and second largest exporter. Inventories are already low and the market already very tight.

The impact of Russia’s actions on the stability of the energy market could be huge.

WTI crude trades +7.2% at $99.05

Brent trades +7.6% at $101.56

Learn more about trading oil here.

Looking ahead

15:30 EIA crude oil inventories

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US futures

Dow futures -2.3% at 32390

S&P futures -2.3% at 4128

Nasdaq futures -2.8% at 13130

In Europe

FTSE -3% at 7252

Dax -5.05% at 13886

Euro Stoxx -4.7% at 3785

 

Will the Nasdaq enter a bear market?

US stocks are set to get slammed on the open as risk sentiment hits the floor. News that Russia is invading Ukraine has sparked a swift flight out of riskier assets and into safe havens.

Whilst the likes of gold, the Japanese yen and the Swiss franc are surging higher, stocks are tumbling with the Nasdaq bearing the brunt of the move.

It’s difficult to imagine that Putin will back off from here. The West are set to announce harsh sanctions which could have implications for global growth.

Moreover, the surging energy prices feed into the inflation story. With inflation at 7.5% the last thing the US needs is higher fuel prices. Maybe we will see US – Iran negotiations move faster towards the conclusion now?

On the data from US GDP was upwardly revised to 7.2% in Q4 on an annualized basis, up from 6.9%. The good news was completely ignored by investors who are focused on the broader risk sentiment story as the world faces a potential war in Europe as well as sky high inflation. There doesn’t appear much to be optimistic about currently.

Where next for the Nasdaq?

The Nasdaq continues to trend lower heading towards 20% loses from its November high, after taking out a key support at 13700. The index trades below its 50 & 100 sma and the 50 crossed below the 100 sma in a bearish signal. The RSI is supportive of further losses which it remains out of oversold territory. The selloff appears to have found some support on the 100-week sma just above the key psychological level of 13000. Sellers would need to break this level down in order to attack 12950 the May ’21 low and 12500 the March ’21 low. Buyers would need to retake 13700 to negate the near term drop before eyeing resistance at 14000.

FX markets USD rallies, EUR tumbles

USD is surging higher on safe haven flows. It appears that the USD has finally woken up to the Russian threat. The greenback had failed to pick up much is any safe haven bid over the past few weeks. The USD index trades at the highest level since January 31^st and is attempting to make a higher high.

EUR/JPY has fallen to a two-month low as the Japanese yen is supported by safe haven flows whilst the euro, which is exposed to Russia, through energy supplies to Europe, banking and trade, is trading heavily under pressure. The pair hi a low of 127.92 although has risen slightly off that level to 128.30.

GBP/USD -1.25% at 1.3372

EUR/USD -1.15% at 1.1117

Looking ahead

15:30 EIA crude oil inventories