Ongoing Russia-Ukraine Conflict May Lead To Pullback On Wall Street

The major U.S. index futures are currently pointing to a sharply lower open on Monday, with stocks likely to move back to the downside following the substantial rebound seen over the two previous sessions.

Geopolitical concerns may weigh on the markets once again amid the ongoing conflict between Russia and Ukraine.

Ukrainians continue to hold out against the Russian assault, while news that Russian President Vladimir Putin has put his nuclear forces on high alert has led to worries about an escalation of the war.

Russian and Ukrainian officials are meeting on the Belarusian-Ukrainian border to discuss a possible ceasefire, although optimism the talks will lead to peace is low.

The West continues to ramp up sanctions against Russia in response to the invasion, leading to worries about the impact on the global economy.

Extending the stunning recovery seen over the course of Thursday’s session, stocks moved sharply higher during trading on Friday. The major averages all showed significant moves to the upside on the day.

Going into the close of trading, the Nasdaq and the S&P 500 reached new highs for the session. The Dow soared 834.92 points or 2.5 percent at 34,058.75, the Nasdaq surged 221.04 points or 1.6 percent to 13,694.62 and the S&P 500 spiked 95.95 points or 2.2 percent to 4,384.65.

For the holiday-shortened week, the Dow edged down by 0.1 percent, but the S&P 500 advanced by 0.8 percent and the Nasdaq jumped by 1.1 percent.

The rally on Wall Street came as traders continued to pick up stocks at relatively reduced levels following the sell-off seen in recent sessions.

The major averages showed a notable rebound from multi-month intraday lows during trading on Thursday but remain well off their recent highs.

Concerns about the eventual Russian invasion of Ukraine weighed on the markets, although some analysts have called the selling overdone.

While the U.S. and its allies have imposed severe sanctions on Russia in response to the attack, the measures are not seen as crippling as some had feared.

The West’s seeming unwillingness to target Russia’s energy sector has helped ease worries about a spike in oil and gas prices fueling further inflation.

Steel stocks turned in some of the market’s best performances on the day, with the NYSE Arca Steel Index soaring by 6 percent.

Substantial strength was also visible among banking stocks, as reflected by the 4 percent spike by the KBW Bank Index.

Utilities stocks also moved sharply higher over the course of the session, driving the Dow Jones Utilities Average up by 3.6 percent.

Pharmaceutical, housing, chemical and healthcare stocks also saw significant strength, moving notably higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are spiking $4.21 to $95.80 a barrel after tumbling $1.22 to $91.59 a barrel last Friday. Meanwhile, after plunging $38.70 to $1,887.60 an ounce in the previous session, gold futures are jumping $24.40 to $1,912 an ounce.

On the currency front, the U.S. dollar is trading at 115.40 yen versus the 115.55 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1199 compared to last Friday’s $1.1268.

Asia

Asian stocks ended mostly higher on Monday as optimism over talks between Russia and Ukraine outweighed concerns over banning Russia from the SWIFT financial system.

The EU, Britain and the U.S. are freezing the Russian central bank’s assets, meaning they can’t be deployed to intervene in currency markets.

The Russian currency fell nearly 30 percent against the U.S. dollar after President Putin put Russian nuclear forces on high alert in an effort to deter NATO supplies from being sent into Ukraine.

Chinese shares ended a choppy session modestly higher, led by gains by energy and material stocks. The benchmark Shanghai Composite Index rose 10.90 points, or 0.3 percent, to 3,462.31, while Hong Kong’ Hang Seng Index dipped 0.2 percent to close at 22,713.02.

Japanese stocks fluctuated before ending slightly higher amid hopes that the planned talks between Russia and Ukraine at the Belarusian-Ukrainian border could lead to a ceasefire.

The Nikkei 225 Index edged up 50.32 points, or 0.2 percent, to 26,526.82, while the broader Topix closed 0.6 percent higher at 1,886.93.

Oil explorer Inpex topped the gainers list to close 2.6 percent higher, while technology investor SoftBank Group and air conditioner maker Daikin Industries both rose over 1 percent.

Australian markets rose notably despite high levels of global uncertainty and tumbling U.S. index futures. The benchmark S&P/ASX 200 Index climbed 51.30 points, or 0.7 percent, to 7,049.10, while the broader All Ordinaries Index gained 49.60 points, or 0.7 percent, to finish at 7,323.20.

Strong iron ore prices helped lift miners, with heavyweights Rio Tinto and BHP jumping 3-4 percent. Woodside Petroleum rallied 2.1 percent and Santos advanced 1.5 percent as oil prices continued to climb amid the intensifying Russia-Ukraine conflict.

Gold miner Newcrest Mining added 3.4 percent after receiving final approval in relation to the acquisition of Pretium Resources by way of Canadian Plan of Arrangement.

Seoul stocks advanced on reports that Ukrainian authorities will hold talks with Russian counterparts. The Kospi rose 22.42 points, or 0.8 percent, to close at 2,699.18, with Naver and LG Chem rising 1-2 percent.

Europe

European stocks have shown a significant move to the downside on Monday amid heightened tensions over the Russian invasion of Ukraine.

Russia’s central bank more than doubled interest rates to 20 percent in a desperate attempt to shore up the plummeting ruble and prevent the run of banks amid crippling Western sanctions over the Russian war in Ukraine.

The ruble sank more than 40 percent to a record low against the dollar, while oil prices jumped by as much as $7 a barrel as President Vladimir Putin put his country’s nuclear deterrent on high alert amid the ongoing conflict in Ukraine.

While the French CAC 40 Index has plunged by 2.7 percent, the German DAX Index is down by 1.9 percent and the U.K.’s FTSE 100 Index is down by 1.2 percent.

Banks have led the losses after the U.S. Japan and other Western nations moved over the weekend to impose additional sanctions against Russia, including restrictions on access for some Russian banks to the SWIFT global bank payments system.

Commerzbank, Deutsche Bank, BNP Paribas and Societe Generale have plummeted, while BP shares have also slumped after the oil giant said it is exiting stake in Russia’s Rosneft.

Meanwhile, shares of BAE Systems have soared after Germany said it would ramp up military spending in a major policy shift.

U.S. Economic Reports

MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of February at 9:45 am ET. The Chicago business barometer is expected to dip to 63.9 in February from 65.2 in January, although a reading above 50 would still indicate growth.

At 10 :30 am ET, Atlanta Federal Reserve President Raphael Bostic is due to speak on the Federal Reserve and the Economy and participate in moderated conversation before a virtual event with Harvard University EC 10 class students.

Stocks In Focus

Shares of First Horizon (FHN) are skyrocketing in pre-market trading after the bank agreed to be acquired by Toronto-Dominion (TD) for $13.4 billion or $25 per share in cash.

Biodiesel maker Renewable Energy Group (REGI) is also seeing substantial pre-market strength after agreeing to be acquired by Chevron (CVX) for $61.50 per share.

Shares of Nielsen (NLSN) may also move to the upside after the information, data and market measurement firm reported better than expected fourth quarter earnings, provided upbeat guidance and announced a $1 billion share repurchase program.

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