2022/03/01 (011) Column

Oil above 100 USD
1st trading day in March sharply down
EURUSD hit its lowest level since June 2020
Germany’s DAX down 3.5% to a 1-year low below the 14,000 level


Crude Oil
WTI crude futures surged more than 10% to above $105 per barrel on Tuesday, a fresh high since 2014 as concerns grew about supply disruption from key exporter Russia after fights in Ukraine intensified with the Russian army closing on Kyiv. The traders are becoming increasingly reluctant to buy Russian oil, and are facing payment and delivery difficulties. Meanwhile, a possible release of between 60 million and 70 million barrels of reserves being considered by the US and others failed to calm the energy market. Meanwhile, OPEC+ will meet on Wednesday to discuss output policy, where it is expected to stick to its plan of moderate supply increases despite the market turmoil brought by the invasion.

Wall Street Sharply Down Today
Wall Street ended the first trading day of March sharply down, with the Dow Jones tumbling almost 700 points and the S&P 500 and the tech-heavy Nasdaq declining 2% each. Market sentiment remains dominated by war headlines, with Russian troops bombing cities and enclosing the capital city of Kyiv. On top of that, energy prices have skyrocketed since the Russian invasion began, adding to the headache for Central Banks trying to tame the highest inflation in decades. Falls are the most pronounced in financial stocks, which may be the most impacted by sanctions, with American Express down over 8% and Bank of America, JP Morgan, and Goldman Sachs shedding more than 3%. US Tech 100 Index traded at 14038 this Tuesday March 1st, decreasing 309 or 2.17 percent since the previous trading session. Looking back, over the last four weeks, USNDX lost 7.28 percent. Over the last 12 months, its price rose by 7.49 percent. Looking ahead, we forecast US Tech 100 Index to be priced at 13863 by the end of this quarter and at 13027 in one year, according to Trading Economics global macro models projections and analysts expectations.

EUR/USD
The euro hit its lowest level since June 2020 against its US counterpart, bottoming around the critical support level at $1.11 as the war in Ukraine clouded the outlook for the economy just as inflation was taking hold in the eurozone. Governments worldwide have imposed an unprecedented array of economic and other sanctions on Russia, targeting its finance, energy and military-industrial sectors. Money market futures dated to the ECB’s meetings this year now price in a total of 25 basis points by year-end, from roughly 30 bps on Monday and 40bps late last week. With investors now cutting back their bets for European Central Bank rate hikes this year, it seems to be making it difficult for the euro to attract fresh buying.

Germany Stock Market Index
European equity markets tumbled on Tuesday, with Germany’s DAX down 3.5% to a 1-year low below the 14,000 level, as the Russia-Ukraine crisis deepened on the sixth day of the invasion. In the latest developments, Russian troops are enclosing the capital city of Kyiv, after Russia’s defense minister said Moscow will continue its attack until its goals are met. Across sectors, travel and leisure shares slumped 7% dragged down by airlines; and banks lost 6.8% as traders scaled down their expectations of monetary tightening from the European Central Bank and the yield of Germany’s Bund went back to negative territory. On the other hand, defense stocks extended gains from the previous session, led by German defense company Rheinmetall after the German government’s vow to boost defense spending.MOEX Russia Index
The Central Bank of Russia suspended equity trading at the Moscow Exchange for two consecutive days until Tuesday, due to heightened volatility from harsher western sanctions on Russia as retaliatory measures on the Russian invasion in Ukraine. The development came after the Central Bank of Russia raised its key policy rate to 20% from 9.5% on Monday in an emergency move to counter the risk of further depreciation in the currency. The Russian ruble tanked as much as40% in offshore markets after Western nations announced new sanctions against Russia over its invasion of Ukraine. Western allies agreed on Saturday to remove key Russian banks from the SWIFT interbank messaging system and freeze the assets of Russia’s central bank, limiting the country’s ability to access its overseas reserves. To make things even worst today Biden’s administration banned U.S. people and companies from doing business with the Bank of Russia, the Russian National Wealth Fund and the Ministry of Finance.