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March 21, 2022

Before the Bell: March 21

Equities

Wall Street futures were uneven early Monday as crude prices remain volatile and investors cautiously watch developments in Ukraine. Major European markets were choppy. TSX futures turned positive.

Ahead of the North American open, futures linked to all three key indexes wavered throughout the early premarket period. Last week, the S&P added more than 6 per cent for its best weekly showing since 2020. The Dow gained more than 5 per cent while the Nasdaq finished the week up 8.1 per cent. The S&P/TSX Composite Index finished Friday’s session up 0.22 per cent, ending at a record high.

“There appears to be a growing disconnect between what markets are doing and what is happening on the ground in Ukraine and the increasingly brutal measures that Russian forces are taking in trying to wear down resistance to their occupation, including the use of hypersonic missiles,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“While markets appear to be focusing on the fact that peace talks are taking place, there is also little evidence that they are actually leading anywhere, given the distance between the two sides in respect of what they will accept.”

Reuters reported Turkey’s foreign minister said on Sunday that Russia and Ukraine were nearing agreement on “critical” issues and he was hopeful for a ceasefire if the two sides did not backtrack from progress achieved so far.

Elsewhere, China’s Civil Aviation Administration of China (CAAC) said a Boeing 737 carrying 132 people crashed in mountains in south China on Monday. Flight data shows the Boeing 737-800 jet was just over an hour into its trip from the southern city of Kunming to Guangzhou, near Hong Kong, when it suddenly lost altitude.

In this country, a work stoppage at CP rail is entering its second day

More than 3,000 CP Rail conductors, engineers, train and yard workers represented by Teamsters Canada Rail Conference are off the job after the two sides failed to reach a deal before a weekend deadline set by the union and the company. The disruption has raised concerns about the impact on the already strained supply chain and has put pressure on Ottawa to help find a resolution.

On Wall Street, Nike Inc. reports earnings after the close of trading.

Overseas, the pan-European STOXX 600 was up 0.04 per cent at midday. Britain’s FTSE 100 rose 0.44 per cent. Germany’s DAX slid 0.11 per cent while France’s CAC 40 edged fell 0.18 per cent.

In Asia, markets in Japan were closed. Hong Kong’s Hang Seng fell 0.89 per cent, erasing early gains.

Commodities

Crude prices jumped in early going, driven by the possibility of EU sanctions on Russian oil.

The day range on Brent is US$107.06 to US$112.91. The range on West Texas Intermediate is US$104.08 to US$109.77. Both benchmarks were up by more than 3 per cent in early going after gaining more than 1 per cent last week.

Talks are scheduled this week between U.S. President Joe Biden and European Union governments for a series of summits aimed at toughening sanctions against Russia in response to the attack on Ukraine. EU governments will weigh whether to join the U.S. in placing an embargo on oil from Russia, Reuters reports.

CMC’s Michael Hewson also said Monday’s price gains also followed attacks by Houthi rebels on various Saudi Aramco oil and gas sites across Saudi Arabia over the weekend.

“Some production was temporarily disrupted, with the attack another unwelcome reminder of the uncertainty currently affecting global oil markets at this time,” he said.

In other commodities, gold prices rose as investors again opted for safer holdings.

Spot gold rose 0.2 per cent to US$1,924.45 per ounce. U.S. gold futures were down 0.3 per cent at US$1,924.00.

Currencies

The Canadian dollar was little change while its U.S. counterpart held relatively steady against a group of global counterparts.

The day range on the loonie is 79.12 US cents to 79.44 US cents.

“High oil prices are providing some support for the CAD but the broader relaxation in market volatility is helpful in underpinning the CAD near recent range lows,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“There is little new news to focus on for the CAD at the start of the week and there is little in terms of domestic data to focus on this week. That leaves the CAD still largely at the mercy of the external environment (risk mood) and the USD in the short run.”

There were no major Canadian economic releases on Monday’s calendar.

The U.S. dollar index, which measures the greenback against six peers, was slightly firmer at 98.335.

The euro was at US$1.1038, 0.17-per-cent lower, and Britain’s pound was at US$1.3156 off 0.16 per cent with the future direction of both dependent on the war in Ukraine, which has hurt expectations of European economic growth, according to Reuters.

Barrick Gold has ended a long-running dispute with Pakistan and will now start to develop one of the world’s biggest gold and copper mining projects under an agreement signed on Sunday. Under the out-of-court deal, an $11-billion penalty slapped against Pakistan by a World Bank arbitration court and other liabilities will be waived and Barrick and its partners will invest $10 billion in the project, Pakistan Finance Minister Shaukat Tarin said.

Warren Buffett’s Berkshire Hathaway Inc has struck an $11.6-billion deal to buy Alleghany Corp , the owner of reinsurer TransRe, just weeks after the 91-year-old billionaire bemoaned the lack of good investment opportunities. Alleghany adds to Berkshire’s already large insurance portfolio, which includes Geico auto insurance, General Re reinsurance and a unit that insures against major and unusual risks. Founded in 1929 by railroad entrepreneurs Oris and Mantis Van Sweringen, New York-based Alleghany operates mainly in property and casualty reinsurance and insurance through subsidiaries and investments.

Economic news

(12 p.m. ET) U.S. Fed Chair Jerome Powell speaks at the NABE Economic Policy Conference in Washington.

With Reuters and The Canadian Press

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