Worries over new Russia sanctions could lead to pullback on Wall Street
Major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to give back some ground after rising mostly in the previous two sessions.
Concerns over the impact of additional sanctions on Russia could weigh on Wall Street, with members of the European Union under pressure to extend sanctions to Russia’s oil and coal sectors in response to alleged war crimes in Ukraine.
Crude oil prices extend yesterday’s surge amid concerns over the possibility of further sanctions, leading to renewed inflationary anxiety.
Trading activity could be somewhat subdued, however, as traders eagerly await the release of the Federal Reserve’s March meeting minutes on Wednesday.
The Fed raised interest rates for the first time since 2018 at the March meeting, and traders will be watching the minutes for clues about the prospects for future rate hikes.
CME Group’s FedWatch tool currently indicates a 74.4% chance that the Fed will raise rates by 50 basis points next month.
Shares were mostly higher during Monday’s trading day, adding to the gains posted in last Friday’s session. Tech stocks contributed to the advance, which led to a remarkable gain for the Nasdaq.
The major averages all closed positive, although the tech-heavy Nasdaq outperformed its peers. While the Nasdaq jumped 271.05 points or 1.9% to 14,532.55, the S&P 500 advanced 36.78 points or 0.8% to 4,582.64 and the Dow rose 103, 61 points or 0.3% at 34,921.88.
Shares of Twitter (TWTR) helped lead the rally in tech stocks, climbing 27.1% after a Securities and Exchange Commission filing revealed that Tesla (TSLA) CEO Elon Musk took a 9.2% stake in the social media giant.
Significant strength was also visible among computer hardware stocks, as evidenced by the 2% jump in the NYSE Arca Computer Hardware Index.
In the computer hardware sector, computer peripheral maker Logitech (LOGI) posted a strong gain after Goldman Sachs raised its rating on the company’s stock to Buy from Neutral.
Semiconductor stocks also performed strongly on the day, pushing the Philadelphia Semiconductor Index up 1.7%. Networking and biotechnology stocks have also increased significantly.
Outside of the technology sector, retail stocks saw substantial strength, driving the Dow Jones US Retail Index up 2%.
Meanwhile, stocks lost ground after their recent strength, with the Dow Jones Utilities Average falling 1.1% after ending the previous session at a record high at the close.
Traders also kept an eye on developments in the ongoing war between Russia and Ukraine as the conflict continues to impact energy prices.
Ukraine has accused Russia of carrying out a “massacre” in the town of Bucha, and Western nations have reacted to images of dead civilians by calling for new sanctions against Russia.
In US economic news, a report from the Commerce Department showed that new orders for US manufactured goods fell in line with economists’ estimates in February.
The Commerce Department said factory orders fell 0.5% in February after jumping an upward-revised 1.5% in January.
Economists had expected factory orders to fall 0.5% from the 1.4% jump initially reported the previous month.
Commodities, Forex Markets
Crude oil futures jumped $1.12 to $104.40 a barrel after climbing $4.01 to $103.28 a barrel on Monday. Meanwhile, after rising $10.30 to $1,934 an ounce in the previous session, gold futures fell slightly $0.70 to $1,933.30 an ounce. .
On the currency front, the US dollar is trading at 122.96 yen from 122.79 yen at the close of trading in New York on Monday. Against the Euro, the Dollar is valued at $1.0957 versus $1.0972 yesterday.
Asian stocks rose broadly on Tuesday, although regional gains remained limited by talk of new sanctions on Russia and rising prices for important commodities, including crude oil. Trading volumes were low due to public holidays in China, Hong Kong and Taiwan.
Japanese equities made modest gains on improving services and household spending data. The Nikkei 225 index rose 0.2% to 27,787.98.
Heavyweights SoftBank and Fast Retailing rose 2.6% and 2.1% respectively, while oil explorer Inpex rose around 2%. Shimamura climbed 7.3% after the clothing retailer posted record net profit for the financial year.
Australian markets ended on a positive note as the Reserve Bank of Australia kept its cash rate at 0.1% but signaled that higher interest rates were closer.
The benchmark S&P/ASX 200 edged up 0.2% to 7,527.90 as soaring oil prices on concerns over tight supply pushed energy stocks higher. Tech stocks also jumped, with Block Inc., owned by Twitter founder Jack Dorsey, up 6.2%.
Nickel-lithium miner IGO fell 2.9% after the company said its $829.3 million takeover of nickel producer Western Areas could fail.
Shares in Seoul ended on a flat note after data showed inflation accelerating at the fastest pace in more than a decade in March.
Investors were also waiting for minutes from the U.S. Federal Reserve’s March meeting, due out on Wednesday, and the Bank of Korea’s rate-setting meeting slated for next week, for clues about the outlook for the future. rate.
Pasta maker LG Energy Solution climbed 2.4% and Samsung SDI 2.6% after Tesla reported a strong quarterly performance.
European stocks mostly fell on Tuesday as new sanctions against Russia loom. The 27 EU members are under pressure to extend sanctions to Russia’s oil and coal sectors for what appear to be war crimes in Ukraine.
In economic news, Eurozone PMI data released earlier in the day pointed to a strong expansion in private sector activity in March, helped by robust growth in services. However, business confidence hit its lowest level in 17 months due to a record rise in inflation.
While the French CAC 40 index fell 1.4%, the German DAX index was down 0.5% and the British FTSE 100 index was down 0.1%.
Societe Generale shares fell sharply. The ING group has signed an agreement with Boursorama, a subsidiary of the French lender, to offer services to ING retail customers in France.
Energy stocks are mixed even as oil prices climb on concerns over the prospect of tougher US and European sanctions against Russia.
HomeServe shares gained. The UK home repair and improvement company said it made very good progress in fiscal 2022, delivering an acceleration in performance from the previous year, in line with expectations.
Go-Ahead Group also surged. The transport operator said it would reinstate its pre-Covid dividend policy of paying a dividend to shareholders equal to between 50% and 75% of underlying earnings per share from financial year 2022.
The action of the Casino group is also progressing. The French retailer said it sold its remaining shares in real estate company Mercialys for 86 million euros via a total return swap or TRS.
Kion Group AG has also taken action. The German warehouse equipment supplier has decided to withdraw its outlook for fiscal 2022, due to continuing and significant uncertainties in supply markets.
Shares of Sixt SE also surged. The mobility service provider said it expects first-quarter 2022 consolidated pre-tax profit to be between 80 million euros and 95 million euros, from minus 14 million euros last month. last year.
US Economic Reports
A Commerce Department report on Tuesday showed the U.S. trade deficit was virtually unchanged in February as both imports and exports increased.
The Commerce Department said the trade deficit narrowed by less than $0.1 billion to $89.2 billion in February. Economists had expected the deficit to narrow to $88.5 billion from $89.7 billion originally reported for the previous month.
The trade deficit was little changed, with the value of imports jumping $4.1 billion or 1.3% to $317.8 billion, while the value of exports jumped $4.1 billion or 1.8% to $228.6 billion.
At 10 a.m. ET, the Institute for Supply Management is due to release its report on service sector activity for March.
The ISM Services PMI is expected to rise to 58.0 in March from 56.5 in February, with a reading above 50 indicating growth in the sector.
Minneapolis Federal Reserve Chairman Neel Kashkari is also set to deliver a keynote address at a virtual Minneapolis Fed conference on the uneven impacts of inflation at 10 a.m. ET.
At 10:05 a.m. ET, Federal Reserve Governor Lael Brainard is also scheduled to speak at the Minneapolis Fed’s virtual conference.
New York Federal Reserve Chairman John Williams is scheduled to take part in a moderated discussion on health and the economy hosted by The New York Times at 2 p.m. ET.
Actions in brief
Shares of First Solar (FSLR) are falling significantly in premarket trading after Bank of America Securities downgraded its rating on the solar company’s shares to Underperform from Neutral.
Online car seller Carvana (CVNA) could also see initial weakness after RBC Capital Markets downgraded its rating on the company’s shares to Sector Perform from Outerperform.
On the other hand, shares of Carnival (CCL) are seeing notable premarket strength after the cruise operator said the one-week period from March 28 to April 3 was its busiest booking week. the history of the company.
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