2022/02/17 (005) Column

Military tensions above us in heaven
are more worse than a sword of damocles
Germans DAX & european stocks remain under pressure,
meanwhile US Stocks Close at 3 Week Lows & Gold Hits 36 week Highs!


Gold Hits 36-week High

Gold increased to a 36-week high of 1901 USD/t.oz, extending its upward momentum to levels not seen since June of 2021, as mounting tensions between Russia and the West over Ukraine lifted bullion’s safe-haven appeal. NATO said it had not seen Russia pulling back troops from Ukraine’s borders, while Russian news reported mortars fired in eastern Ukraine. Aside from safe-haven bids, minutes from the Federal Reserve’s last meeting showed policymakers might not be as hawkish as investors feared. On top of that, a disappointing US jobless claims report has supercharged existing bullish momentum for the yellow metal.

US Stocks Close at 3-Week Lows

US securities deepened losses to close around three-week lows on Thursday, with the Dow Jones ending 623 points lower, the S&P 500 dropping 2.1%, and the Nasdaq slipping 2.5%, as war woes in Eastern Europe intensified after President Biden reiterated a warning that Russia could invade Ukraine in the coming days. Earlier, NATO had stated it had not seen Russia pulling back troops from Ukraine’s borders, while Russian news reported mortars fired in eastern Ukraine. As risk-aversion weighed down on bond yields, banking stocks fell, including Goldman Sachs and Wells Fargo, which had released upbeat forward guidance. On the other side earnings from Walmart, Cisco and Applied Materials toppedexpectations. Traders also digested fresh economic data, with initial claims unexpectedly rising last week and housing starts falling much more than expected..

European Stocks Remain Under Pressure

The main European bourses finished Thursday’s session in the red, led by economically sensitive financials, energy and industrial companies, as concerns over growing tensions in Ukraine eclipsed a slew of upbeat earnings. Russian-backed rebels and Ukrainian forces traded accusations that each had fired across the ceasefire line in eastern Ukraine. At the same time, the US warned of the possibility of a Russian invasion any day, while NATO stated it had not seen Russia pulling back troops from Ukraine’s borders. On the corporate side, Commerzbank jumped almost 3% after the German lender’s posted a better-than-expected net profit in the fourth quarter. After fourth-quarter solid earnings reports, Dutch engineering firm Arcadis and French luxury goods company Kering gained 9% and 5%, respectively. Domestically, the benchmark DAX fell for a second straight session to end around 15,250. It seems like that the bears are only waiting for a trigger to sell the DAX. However, a shaky technical picture only emerges below the market of 15,000 points. Where are the lows from the summer of 2021. So that more as an handfuld days below could trigger long-term sales pressure?!
WTI Crude Extends Losses to Below $91.5

WTI crude futures fell more than 2% to below $91.5 per barrel on Thursday, as investors weigh prospects of new crude supplies from Iran against renewed geopolitical tensions in Ukraine that raised concerns of supply disruptions in major oil producer Russia. Iran is close to accepting a deal on its nuclear programme, which could mean the release of about 1.3 million barrels a day of crude supply, helping to ease a tight global market. Meanwhile, tensions between Russia and the West over Ukraine could escalate after Russian-backed rebels accused Ukrainian forces of shelling their territory. On Wednesday, NATO accused Russia of increasing troops at the Ukrainian border, while Moscow claimed it had begun withdrawing some of its military units.
Russian Ruble Weakens on Military Tension
while Russian Stocks Fall on Geopolitical Tensions

The Russian ruble weakened to 77 per USD. Threats of an invasion in Ukraine returned after Russian-backed separatists in eastern Ukraine claimed government forces opened fire in their territory. At the same time, US authorities stated Russia amassed an additional 7,000 troops near the Ukrainian border, despite Moscow reporting otherwise. Meanwhile, Central Bank of Russia Governor Elvira Nabiullina said the bank has still not made a decision on when to resume foreign exchange purchases, as the bank deems the ruble to still be very volatile. On its February 11th meeting, the CBR hiked its benchmark rate by 100bps to a five-year high of 9.5%.

The ruble-based MOEX Russia extended early losses to close 3.7% lower at 3,511 on Thursday. Shares from the financial sector, the most sensitive to sanction threats, cut last session’s gains to fall by 4%, led by TCS Group (-5.5%) and Sberbank (-5.5%). Energy shares also booked losses, driven by Gazprom (-3.2%) and Lukoil (-3.3%), while Novatek (-4.8%) shares continue to slide after the release of its quarterly corporate results late last session.