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March 10, 2022

BEFORE THE BELL: MARCH 10, 2022 AM

Equities

Wall Street futures were down early Thursday after the previous session’s sharp rally with investors awaiting the latest reading on U.S. inflation. Major European markets also gave back some of yesterday’s gains with the Russia-Ukraine war still in focus. TSX futures were down modestly with crude prices rising.

Futures tied to the three major U.S. indexes were all in the red in the early premarket period. On Wednesday, all three spiked with the Nasdaq finishing up 3.6 per cent while the S&P 500 saw its best day since mid-2020.

“I’d be surprised if it [this week’s rally] is sustained for any significant period of time unless we see actual progress towards a ceasefire and Russian exit,” OANDA senior analyst Craig Erlam said in a note.

He said Wednesday’s gains may have been “a hopeful rally rather than one built on solid foundations but it’s the first glimmer of hope we’ve had in weeks.”

In the U.S., traders will be keeping a close eye on the inflationary picture in the United States. February CPI data is due before the bell and economists are forecasting the annual rate of inflation will spike to 7.9 per cent.

“Given the actual circumstances, it is of course very well possible that we see an unpleasant surprise, which would send the U.S. inflation above the 8-per-cent psychological mark,” Swissquote senior analyst Ipek Ozkardeskaya said.

“The question is, by how much the rise in inflation could change the Federal Reserve (Fed) expectations.”

The Federal Reserve makes its next policy decision next week. Economists are still expecting a quarter point increase despite current global uncertainty.

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In this country, investors will get results from travel company Transat AT ahead of the start of trading. Earlier this week, Air Transat and Porter Airlines announced they have signed a code-sharing agreement they hope will draw customers to a wider range of connecting flights in Canada and abroad.

Overseas, the pan-European STOXX 600 was down 1.28 per cent, reversing at least of some of the previous session’s gains. Markets are awaiting the European Central Bank’s next policy announcement early Thursday. Economists are expecting few policy commitments amid the escalating Russia-Ukraine crisis.

Britain’s FTSE 100 fell 1.12 per cent. Germany’s DAX and France’s CAC 40 were down 2 per cent and 2.14 per cent, respectively.

In Asia, Japan’s Nikkei spiked 3.94 per cent in the wake of the previous session’s rally on Wall Street. Hong Kong’s Hang Seng rose 1.27 per cent.

Commodities

Crude prices gained in a choppy session as traders weigh the possibility of world producers moving to hike output in the wake of sanctions on Russian crude.

The day range on Brent is US$110.20 to US$117.37. The range on West Texas Intermediate US$107.01 to US$113.48. On Wednesday, Brent fell 13 per cent, its biggest drop in two years. WTI lost 12.5 per cent.

“Volatility continues to be the winner overnight, particularly in the commodity space as the street engaged in its latest grasping at straws attempt to price in ‘peak-Ukraine’,” OANDA senior analyst Jeffrey Halley said.

Reuters reports that markets got conflicting signals on whether producers would step up production.

UAE Energy Minister Suhail al-Mazrouei said on Twitter late on Wednesday his country is committed to the existing agreement by the Organization of the Petroleum Exporting Countries and allies to ramp up oil supply by 400,000 barrels per day monthly following sharp cuts in 2020.

Hours earlier, prices fell on comments from UAE’s ambassador to Washington saying his country will be encouraging OPEC to consider higher output to fill the supply gap due to sanctions on Russia, Reuters reported.

“To suggest the oil market is confused would be an understatement as we are in an unprecedented situation,” Stephen Innes, managing partner at SPI Asset Management, said.

Gold prices, meanwhile, were down.

Spot gold were off 0.5 per cent at US$1,981.96 per ounce by early Thursday morning after dropping as much as 1 per cent. U.S. gold futures were unchanged at US$1,988.60. Gold fell about 3 per cent on Wednesday, seeing its worst intraday drop in more than a year.

Currencies

The Canadian dollar was weaker while its U.S. counterpart edged higher against a basket of currencies.

The day range on the loonie is 77.86 US cents to 78.18 US cents.

On global markets, the U.S. dollar index was up 0.2 per cent ahead of the latest U.S. inflation figures. The index, which weighs the greenback against a selection of world currencies, lost 1.17 per cent on Wednesday.

The euro was trading at US$1.10489, down 0.32 per cent after jumping 1.6 per cent on Wednesday, its best day since June 2016, according to figures from Reuters.

Britain’s pound was down 0.2 per cent at US$1.3159 after jumping 0.65 per cent overnight.

More company news

Amazon.com Inc said its board approved a 20-for-1 split of the e-commerce giant’s common stock and authorized a US$10-billion buyback plan. This is the first stock split by Amazon since 1999 and will give investors 19 additional shares for every share they hold. Trading based on the new share price will begin on June 6. Shares were up nearly 6 per cent in premarket trading. The news was announced after Wednesday’s close.

Economic news

ECB Monetary Policy meeting

(8:30 a.m. ET) U.S. initial jobless claims for week of March 5.

(8:30 a.m. ET) U.S. CPI for February.

With Reuters and The Canadian Press

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