Futures Pointing To Initial Weakness On Wall Street

The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to move to the downside following the mixed performance seen in the previous session.

Concerns about the economic impact of the ongoing conflict between Russia and Ukraine may contribute to initial weakness on Wall Street.

The Russian invasion of Ukraine has led to a jump in energy prices, leading to worries about a further acceleration in the pace of inflation.

After a sharp plunge in early trading, U.S. stocks regained some lost ground Monday morning but faltered again and eventually ended the day’s session on a mixed note amid high volatility.

The major averages closed mixed. The Dow ended with a loss of 166.15 points or 0.5 percent at 33,892.60 after swinging between 33,469.31 and 33,963.62. The S&P 500, which briefly emerged into positive territory around later morning, ended the session with a loss of 10.71 points or 0.2 percent at 4,373.94, while the Nasdaq settled with a gain of 56.77 points or 0.4 percent at 13,751.40.

The escalation in the Russia-Ukraine conflict and stringent sanctions imposed on Russia by the Western countries rendered the mood cautious.

G7 nations agreed to exclude Russian banks from SWIFT, and the Biden administration announced that it would ban U.S. people and companies from doing business with the Bank of Russia, the Russian National Wealth Fund, and the Ministry of Finance.

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.

On the U.S. economic front, MNI Indicators released a report showing a significant slowdown in the pace of growth in Chicago-area business activity in the month of February.

The report showed the Chicago business barometer tumbled to 56.3 in February from 65.2 in January. While a reading above 50 still indicates growth, economists had expected the barometer to show a much more modest drop to 63.0.

Financials shares drifted lower as investors weighed the sector’s exposure to Russia. Energy stocks moved up as oil prices rose on concerns over possible supply disruptions.

Citigroup and JP Morgan Chase both declined more than 4 percent. Goldman Sachs shed about 2.5 percent. McDonalds, Nike, P&G, Visa, IBM and 3M lost 1 to 2 percent.

Chevron moved up more than 2 percent. Boeing gained nearly 2 percent and Salesforce.com advanced 1.2 percent.

Tesla shares surged higher, buoyed by reports that the company’s proposal to set up a factory in Brandenburg, Germany, is in the final phase of the approval process.

Commodity, Currency Markets

Crude oil futures are spiking $4.03 to $99.75 a barrel after soaring $4.13 to $95.72 a barrel on Monday. Meanwhile, after climbing $13.10 to $1,900.70 an ounce in the previous session, gold futures are jumping $18.80 to $1,919.50 an ounce.

On the currency front, the U.S. dollar is trading at 114.91 yen compared to the 115 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1161 compared to yesterday’s $1.1219.

Asia

Asian stocks advanced on Tuesday as investors gained some optimism from talks aimed at ending the Russian military assault on Ukraine. U.S. President Joe Biden said on Monday Americans should not worry about a nuclear war after Moscow put its nuclear deterrent on high alert.

Chinese shares rose after official data showed factory activity in the country picked up momentum in February following the Lunar New Year holiday. Services activity also grew at a faster pace in the month.

The benchmark Shanghai Composite Index climbed 26.53 points, or 0.8 percent, to 3,488.83, while Hong Kong’s Hang Seng Index edged up 48.69 points, or 0.2 percent, to 22,761.71 amid mixed messaging from the government over whether it plans a lockdown this month.

Japanese shares rose sharply despite data showing that manufacturing activity growth slowed to a five-month low in February. The Nikkei 225 Index jumped 317.90 points, or 1.2 percent, to 26,844.72, while the broader Topix ended up 10.24 points, or 0.5 percent, at 1,897.17.

Toyota Motor Corp edged down slightly. The company suspended domestic factory operations after a supplier of plastic parts and electronic components was hit by a suspected cyberattack.

South Korean financial markets were closed for Independence Day holiday.

Australian markets rose notably as the Reserve Bank announced no changes to the record low cash rate and a survey showed the manufacturing sector in the country moved back into expansion territory in February.

The benchmark S&P/ASX 200 Index rose 47.40 points, or 0.7 percent, to 7,096.50, while the broader All Ordinaries Index ended up 62.10 points, or 0.9 percent, at 7,385.30.

Tech shares dominated the session, with Afterpay-owner Block rallying 12.8 percent. Yancoal soared almost 15 percent after the coal miner posted record revenue and earnings for the first half.

Europe

European stocks have fallen on Tuesday as the sanctions on Russia’s central bank and sovereign wealth funds threatened further disruption to already stretched supply chains.

In economic news, the Eurozone PMI Manufacturing was finalized at 58.2 in February, down slightly from January’s 58.7.

Elsewhere in the U.K., the IHS Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) recorded an output reading of 56.9 in February, up from 54.5 in January.

While the German DAX Index has plunged by 2.8 percent, the French CAC 40 Index is down by 2.4 percent and the U.K.’s FTSE 100 Index is down by 1.2 percent.

Flutter Entertainment shares have plunged in London. The gambling and betting group booked a pretax loss for 2021 after incurring a 543 million pounds ($728.4 million) charge for noncash amortization from acquired intangibles.

Energy major Shell has also shown a notable move to the downside after saying it would exit all its Russian operations.

Sportswear brand Adidas has also moved lower after announcing that it has formally completed the sale of its arm Reebok, to Authentic Brands Group, an American apparel, athletics, and entertainment brands owner.

Zalando, Europe’s biggest online fashion retailer, has also plunged. The company forecast sales growth to decelerate this year.

Meanwhile, German chemicals maker Covestro has surged after saying it had more than doubles its full-year core profit.

U.S. Economic Reports

The Institute for Supply Management is scheduled to release its report on activity in the manufacturing sector in the month of February at 10 am ET.

The manufacturing PMI is expected to inch up to 58.0 in February from 57.6 in January, with a reading above 50 indicating growth in the sector.

Also at 10 am ET, the Commerce Department is due to release its report on construction spending in the month of January. Construction spending is expected to edge up by 0.2 percent.

Atlanta Federal Reserve President Raphael Bostic is scheduled to participate in a moderated conversation before a virtual Atlanta Fed Business Uncertainty Panel Member Economic Briefing and Policy Discussion at 2 pm ET.