Stocks across the world continue to be tossed about by developments between Russia and Ukraine. Investors expressed their uncertainty yesterday in yet another volatile session to close out the month of February, and March will likely start off with more of the same.
Fighting has intensified as Russia continues to press its attack on Ukraine’s major cities. Although initial talks between the two nations did not produce a cease-fire, hopes now rest on a second meeting. Faced with mounting sanctions from the West, Russia’s central bank doubled interest rates on Monday to bolster the ruble, which has plummeted by more than 20% over the last few days.
Stocks in Asia closed in positive territory overnight, but the European markets are sharply in the red. On our shores, futures for the Dow Jones Industrials, S&P, and NASDAQ composite are all indicating a down open. Meanwhile, closely watched oil futures have jumped nearly 5%, to over $100 a barrel.
For now, economic repercussions from Russia’s invasion have been relatively negligible. However, much will depend on how things play out. The big fear is that inflation will accelerate even more than it already has, particularly if energy supplies are impacted. One arguably positive aspect to emerge from recent developments is that the Federal Reserve may not need to act so quickly or forcefully as previously anticipated, as higher oil prices could put the brakes on economic activity without any intervention from the lead bank. Investors will get the latest reading on Fed Chairman Jerome Powell’s thoughts when he speaks at a hearing before the House Committee on Financial Services, which kicks off on Wednesday.
All in all, the last trading day of February was mixed, with the Dow Jones Industrials shedding 166 points, or half a percent, the S&P 500 losing half of that and falling 10 points, and the tech-heavy NASDAQ bucking the trend to rise 56 points, or .4%. By sector, decliners held sway, with the biggest drops coming from real estate (-1.85), financials (-1.5%), and consumer staples (1.3%). On the positive side, it came as no surprise that energy stocks led the way, rising 2.6%, as the threat of supply disruptions pushed West Texas Intermediate prices up .6%, to $96.35 a barrel. For the month of February, the Dow fell by 3.5%, the S&P 500 was off by 3.1%, and the NASDAQ was down 3.4%.
This week’s economic schedule includes the Institute for Supply Management report on manufacturing for February, which is expected to show a slight increase from the month before, and January’s figures on construction spending. Wednesday brings the aforementioned talk at the House committee, followed by initial and continuing jobless claims on Thursday, and nonfarm payrolls and the unemployment rate for February on Friday. Meanwhile, earnings season continues to wind down, with major retailers such as Best Buy (BBY), BJ’s Wholesale Club (BJ), Costco (COST) and Gap (GPS) reporting on Thursday. Other than an update on consumer buying trends, however, these releases will likely go largely unnoticed as the Ukraine crisis retains center stage.
– Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
