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March 9, 2022

Before the Bell: Mar 9

Equities

Wall Street futures jumped early Wednesday as market volatility continues with traders looking to assess the impact of high crude prices and Western sanctions on Russia. Major European markets were up after three sessions of losses. TSX futures also gained.

In the early premarket period, futures linked to the key U.S. indexes were all up more than 1 per cent with Nasdaq futures approaching a 2-per-cent increase. On Tuesday, all three finished weaker after a wild session that saw big swings. The Dow finished down 0.5 per cent despite seeing a gain of more than 500 points at one point in the day. The S&P/TSX Composite Index ended down 0.34 per cent with energy shares helping limit the losses.

“Stock markets are highly volatile as uncertainties loom,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“The European indices rallied at yesterday’s open yet the gains remained short-lived. This is because the rallies are mostly driven by intra-day trades, whereas longer term investors are leaving the market; hedge funds and the like are reportedly cutting exposure and covering shorts as visibility became very limited.”

On Tuesday, crude prices jumped after the U.S. announced it would ban imports of Russian oil. The day also saw a number of big-name companies including McDonald’s, Starbucks and Coca-Cola join other firms in suspending operations in Russia in response to the invasion of Ukraine.

The Globe’s Susan Krashinsky Robertson reports that, in contrast to its fast-food rival, Burger King locations in Russia remain open. Burger King’s Toronto-based parent company, Restaurant Brands International Inc. – which also owns Tim Hortons and Popeyes Louisiana Kitchen – released a statement on Tuesday expressing “horror” at the attack on Ukraine. Chief corporate officer Duncan Fulton wrote that Burger King’s more than 800 locations in the country are owned and operated by franchisees. “We have long-standing legal agreements that are not easily changeable in the foreseeable future.”

On the corporate side, auto parts maker Linamar reports earnings after the close of trading.

In Europe, the pan-European STOXX 600 was up more than 3 per cent in early trading. Britain’s FTSE 100 gained 2.02 per cent. Germany’s DAX and France’s CAC 40 were both up about 4 per cent.

In Asia, Japan’s Nikkei finished down 0.30 per cent after a weak handoff from Wall Street. Hong Kong’s Hang Seng slid 0.67 per cent.

Commodities

Crude prices pulled back slightly in early going but remained at elevated levels amid supply concerns in the wake of the U.S. decision to bank Russian oil.

The day range on Brent is US$125.87 to US$131.64. The range on West Texas Intermediate is US$121.01 to US$126.84. Prices had been rising through much of the overnight period but cooled slightly in the predawn period. Both benchmarks jumped Tuesday on the U.S. announcement.

“A grasping-at-straws sentiment rally around the Ukraine and Russia could still send Brent crude and WTI US$10 lower quite quickly, especially as both are grossly overbought on the technicals,” OANDA senior analyst Jeffrey Halley said in a note.

“Any dips are likely to be short-lived, however.”

Meanwhile, there are signs the market is not yet short of oil.

Reuters reports that U.S. crude inventories rose by 2.8 million barrels, according to market sources citing figures from the American Petroleum Institute. Official U.S. inventory figures are due later Wednesday morning.

In other commodities, gold prices eased from near record highs on as the U.S. dollar held close to a 21-month peak and investors took profits.

Spot gold was down 0.4 per cent at US$2,044.60 per ounce, after climbing in the previous session to US$2,069.89, a whisker away from its record US$2,072.49 scaled in August 2020. U.S. gold futures rose 0.8% to US$2,058.80.

Currencies

The Canadian dollar gained, trading above 78 US cents, as risk sentiment improved and the U.S. dollar held near its highest level in 22 months against a group of world currencies.

The day range on the loonie is 0.77.55 US cents to 78.09 US cents.

“The CAD has picked up a little ground overnight with the USD’s gains yesterday and early in Asian trading blocked around the 1.29 level,” Shaun Osborne, chief FX strategist with Scotiabank, said in a note. “The CAD is a middling performer among the major currencies, however, and is lagging its G10 commodity currency peers on the day.”

There were no domestic releases due Wednesday. Investors are now looking ahead to Friday’s February jobs report from Statistics Canada.

On world markets, the U.S. dollar against a basket of currencies was 0.35-per-cent lower at 98.764, just below a 22-month peak touched on Monday.

After touching a 22-month low on Monday sliding to as much as $1.0806, the euro rose 0.5 per cent on the day to US$1.0946 helped by a report citing unnamed officials that said the European Union was discussing joint bond issuance, according to Reuters.

Britain’s pound rose 0.3 per cent against the U.S. dollar to US$1.3134.

US$0.7786+0.0029 (0.3687%)

Economic news

(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for January.

With Reuters and The Canadian Press

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