North American Morning Briefing: Stock Futures Up, Oil Rises, Ukraine Diplomacy in Focus
By cuterose

North American Morning Briefing: Stock Futures Up, Oil Rises, Ukraine Diplomacy in Focus

16/09/2022  |   323 Views

Durable Goods for February; Current Account for 4Q; Weekly Jobless Claims.

Opening Call:

Stock futures rose on Thursday as investors monitored developments from the Russia-Ukraine war, with leaders including President Joe Biden meeting in Europe to discuss the conflict and potentially more sanctions on Russia.

Leaders from NATO are meeting amid expectations that the Western military alliance will deploy troops to countries in Central and Eastern Europe. Biden will also attend a summit of both the G-7 group of countries and the European Union, later on Thursday. Investor attention will center on whether new sanctions on Russia, and particularly its energy exports, could be rolled out.

"It's now been one month since the Russian invasion of Ukraine began, and without a doubt it remains the most significant ongoing story in markets," said Henry Allen, an analyst at Deutsche Bank. "We'll have to wait and see what further measures might be announced today, but resistance to a full embargo on Russian oil and gas is very much present for now."

The impact of Russia's invasion of Ukraine continues to roil commodities, with energy prices shooting up on Wednesday after Moscow said it would only accept payment for its exports in rubles, which have rapidly depreciated since the start of the war.

"There is little sign the pedal is coming off the accelerator for energy prices, amid a fresh round of volatility that has hit markets after Russia moved to retaliate in the economic war being waged," said Susannah Streeter, an analyst at broker Hargreaves Lansdown.

Stocks to Watch:

Shares of Nikola were up 11% in premarket trading after the company confirmed that production has begun on its battery-electric commercial truck, the Tre. The startup said production began this week at its factory in Coolidge, Arizona.

The company made the announcement at an analysts' presentation on Wednesday. Nikola is scheduled to hold an investor day Thursday beginning at 4:15 p.m. Eastern time.

"We are laser-focused on delivering vehicles and generating revenue as the global leader in zero-emission transportation and energy infrastructure solutions," a spokesperson told MarketWatch.

Read Barrons.com: Why Apple, Tesla, and 98 Other Growth Stocks Are Getting Their Groove Back

Forex:

The dollar firmed broadly on safe-haven demand as investors awaited the outcome of meetings between Joe Biden and NATO, G7 and EU leaders to discuss Russia's attack on Ukraine.

With major countries looking at reducing Europe's dependence on Russian gas, if Europe were to "walk away from" Russian oil, oil prices would likely rise further, raising concerns about further inflation and damage to economic growth, Swissquote said in a research note.

---

The Japanese yen's recent weakness has helped define a new order for safe-haven currencies linked to whether they are energy importers or exporters as the Ukraine war pushes up oil and gas prices, Rabobank said.

"Measured since the start of the war in Ukraine, the best performing G10 currencies are the commodity producers with the JPY and the European currencies lagging behind," Rabobank forex strategist Jane Foley said in a note.

However, it must be stressed that the yen's losses are exacerbated by Bank of Japan's continued ultra-loose policy stance, she said. USD/JPY rises 0.4% to 121.658 after earlier hitting 121.750, its highest level since December 2015, according to FactSet.

---

The Swiss franc fell after the Swiss National Bank reiterated its willingness to intervene in the forex market to counter upward pressure on the currency, which it said "remains highly valued."

The SNB left its policy rate and interest on sight deposits at minus 0.75% and said it was retaining its expansionary monetary policy. However, it warned of risks to inflation due to the tight supply of raw materials, which could result in second-round effects on inflation.

The SNB also reiterated concerns about strength in property markets and said it would continue to monitor developments in mortgage and real-estate markets closely.

Bonds:

In bond markets, 10-year U.S. Treasury yields were up to 2.339% from 2.320%.

In the current uncertain environment, where the war in Ukraine and sanctions against Russia will likely lead to a greater dispersion of growth and inflation outcomes among countries and regions, Pimco tends to favor portfolio flexibility and liquidity to respond to events and potentially take advantage of opportunities.

In fixed-income investments, Pimco expects to target modest duration underweights given current levels, the upside inflation risks, and the prospect for central bank tightening that prioritizes anti-inflation credibility over near-term growth concerns.

The asset manager also expects to de-emphasize curve positions, with the broad global tightening cycle now under way. Pimco continues to see Treasury Inflation-Protected Securities as a reasonably priced way to mitigate upside U.S. inflation risks.

North American Morning Briefing: Stock Futures Up, Oil Rises, Ukraine Diplomacy in Focus

Commodities:

Oil ticked higher in Europe, caught between supply fears and the prospect of an Iran deal, after a U.S. official said progress had been made in talks over Tehran's nuclear ambitions, according to a Reuters report.

That lifted hopes Iranian crude could flow back to global markets, easing some of the tightness resulting from Russian supplies lost following the invasion of Ukraine. Still, fears that fresh sanctions could hit Russian oil exports remain.

SPI Asset Management said Iran's roughly 1.3 million barrels a day "would hit the oil price under normal circumstances but represents only a fraction of what might be lost from Russia."

Read Barrons.com: OPEC+ Isn't Going to Fling Open the Oil Taps. Filling Your Gas Tank Will Cost More

---

Nickel prices jumped by their maximum daily limit on supply disruption worries after Vladimir Putin's request that Russian gas exports be paid for in rubles prompting fears that other commodities could face similar measures, said ANZ. Benchmark nickel prices on the LME rise by 15% to $37,235 a metric ton.

The nickel market is still reeling from an unprecedented rise in prices which led the LME to halt trading for days and impose daily price limits. The volatility is prompting investors to close their nickel positions and steer clear of the metal altogether until the market cools, reducing liquidity and potentially exacerbating sharp price moves, ANZ said.

Gold also strengthened 0.4% to $1,945.30 a troy ounce.

TODAY'S TOP HEADLINES

Wall Street Bets on Gym Chains' Getting Back in Shape

Gym chains are back in favor on Wall Street for the same reason Peloton Interactive Inc. is on the outs: Americans are tired of working out at home.

Budget operator Planet Fitness Inc. and its franchises attracted hundreds of millions of dollars from private fund managers in recent months, according to people familiar with the deals. Higher-end clubs like Life Time Group Holdings and Bay Club Co. have also seen fresh investor interest in their stock and debt, respectively.

Jeans Maker Kontoor Brands Wants Employees to Focus on Generating Cash

Kontoor Brands Inc., which owns denim brands including Lee and Wrangler, has reduced its net debt by more than a third over the past three years in part by turning transactions into cash faster.

Greensboro, N.C.-based Kontoor had $606 million in net debt at the end of last year, compared with $922 million when it was spun off from Denver-based apparel and footwear company VF Corp. in May 2019.

Moderna's Covid-19 Vaccine Works Safely in Young Children, Company Says

Moderna Inc.'s Covid-19 vaccine safely induced robust immune responses in children ages 6 months to 5 years in a new study, the company said, though the shot had modest efficacy against the Omicron variant.

Moderna said Wednesday the vaccine's efficacy against symptomatic infections was 43.7% in children ages 6 months to 2 years, and 37.5% in children ages 2 to 5.

Airline CEOs Ask Biden to Drop Mask Requirement for Planes and Airports

Chief executives of major passenger and cargo airlines pressed President Biden on Wednesday to do away with the requirement that passengers wear masks on planes and in airports.

Top executives at airlines including American Airlines Group Inc., United Airlines Holdings Inc. and Delta Air Lines Inc. wrote in a letter to Mr. Biden that mandatory masking and another requirement that passengers test negative for Covid-19 before flying to the U.S. from abroad are no longer necessary now that cases and hospitalizations are on the decline.

Toshiba Shareholders Reject Plan to Break Into Two Parts

TOKYO-Toshiba Corp.'s shareholders rejected a management plan to split the company into two parts, reflecting strong opposition from foreign shareholders including some who want the company to be auctioned to the highest bidder.

Under the plan, Toshiba would have spun off its electronic-device business and the remaining unit would have focused on energy and infrastructure businesses such as power turbines and water-treatment systems.

Okta Under Fire Over Handling of Security Incident

A security breach affecting identity-protection firm Okta Inc. left corporate cyber teams with an awkward task in recent days: weighing tight-lipped statements from a publicly traded company against real-time taunting from its alleged attackers.

A hacking group known as Lapsus$ on Monday night revealed screenshots obtained from a breach in a post to its public Telegram channel, pushing Okta on Tuesday to disclose that it spotted "an unsuccessful attempt to compromise" a vendor account in January. By Wednesday, Okta said up to 366 of its customers may have had data exposed, which represents about 2.5% of its roughly 15,000 customers world-wide.

Former Boeing Pilot Found Not Guilty in 737 MAX Criminal Trial

(MORE TO FOLLOW) Dow Jones Newswires

March 24, 2022 06:11 ET (10:11 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.
Tags: