Russia invades Ukraine, crude oil exceeds $ 100, the ruble crashes

© Reuters

Par Peter Nurse – Russian President Vladimir Putin authorizes an invasion of Ukraine, sending US indices into correction territory, bringing the ruble to its lowest level in six years and breaking the Brent barrel above $ 100 for the first time in more than seven years. US GDP is expected to hit 7% in the fourth quarter as beverage giant AB InBev impresses with its forecasts. Here’s what you need to know about the financial markets this Thursday, February 24th.

1. Russia invades Ukraine

Russian President Vladimir Putin ordered a full invasion of Ukraine, announcing on state television on Thursday a “special military operation” against his country’s southern neighbor, in view of its “demilitarization and denazification”.

Russian forces reportedly fired missiles at several Ukrainian cities and landed troops on its southern coast, while the Ukrainian defense minister said there were heavy shelling of Ukrainian units in the east, as well as military control centers and airports.

The extent of the Russian offensive is still unclear, but US President Joe Biden has promised that the US and its allies will respond decisively to this “unprovoked and unwarranted attack”.

European Union leaders will meet at an emergency summit in Brussels on Thursday to decide how to respond, but European Commission head Ursula von der Leyen said: “We will target strategic sectors of the Russian economy by blocking their access to technologies and key markets. “

“Furthermore, we will freeze Russian assets in the EU and block the access of Russian banks to the European financial market.”

This could mean the exclusion of Russia from the SWIFT financial messaging system, which could have lasting effects on global economic growth.

2. The ruble falls to its lowest level in the last six years

The ruble has suffered the brunt of the market shock from Putin’s decision to order Russian forces to enter Ukraine, dropping to its lowest level since early 2016, prompting the Moscow Exchange to stop trading.

By 13:05, it was up 3.1% to 83.6669, after climbing as high as 87.9909 earlier.

The Russian central bank has taken steps to try to stabilize its financial markets by increasing the daily supply of dollars through foreign exchange swaps with banks from $ 3 billion to $ 5 billion.

He also said he would intervene in the foreign exchange market for the first time in years and provide additional liquidity to banks by offering 1 trillion rubles ($ 11.5 billion) in overnight repo auctions.

Safe havens were in demand as the US dollar index, which measures the greenback against the six major currencies, rose 0.7% to 96.880, the highest level since January 31.

it fell as low as 1.1209, its lowest level since the end of January, while the risk-sensitive rate fell by 0.8%.

3. Equities should open sharply to the downside; the should lose more than 800 points

US equity markets are expected to open sharply to the downside and slide further into correction territory as investors react to Russian aggression against Ukraine.

At 13:05, they were down 815 points, or 2.5%, while they were down 2.4% and 3.1%.

The weakness follows a bearish session on Wall Street Wednesday, with the blue chip losing nearly 500 points, or 1.4%. The broad index fell 1.8%, closing around 12% below its closing high on January 3, below the 10% mark which marks a correction. The decline of 2.6%.

The DJIA is heading towards a correction from its early January high, while the Nasdaq is about to fall 20% from its November closing record high of bear market territory.

Stocks to watch on Wednesday include Anheuser-Busch InBev (BR :), after the world’s largest brewer forecast higher profits in 2022, while e-commerce giant eBay (NASDAQ 🙂 released earnings and revenue forecasts for the first quarter and for the year. whole year below expectations.

Booking Holdings (NASDAQ 🙂 will also be in the spotlight after the online travel agency reported gross bookings and room nights are still weak, key metrics that remain below pre-COVID-19 levels.

4. US GDP is expected to reach 7.0%

Aside from the unrest in Eastern Europe, the main question on investors’ minds is whether and how much the Federal Reserve will raise short-term rates at next month’s meeting.

Many now expect the central bank to rise by 50 basis points, given the high levels of consumer prices and the strength of the US recovery.

Further evidence of this assumption is expected later on Thursday, with the quarterly figure for the fourth quarter, expected to be 2:30 pm, expected to rise 7% from the 6.9% growth of the previous quarter.

The weeklies are scheduled at the same time and are expected to drop to 235,000 from the previous week’s 248,000.

5. Crude Oil is $ 100 per barrel

Crude oil prices soared above $ 100 a barrel for the first time since 2014 after Russian troops launched an invasion of Ukraine, raising fears of a major disruption to global energy supplies.

Western powers on Wednesday announced sanctions against a number of Russian banks and people close to Putin after recognizing two breakaway regions in eastern Ukraine, but new, tougher measures appear set to follow Thursday’s lead.

“While Western governments are likely to exempt energy transactions from sanctions, the storm of new restrictions will force many traders to be more cautious in handling Russian barrels,” Eurasia Group analysts said in a statement.

Russia is the world’s second largest oil producer and Europe’s largest supplier, supplying around 35% of the latter’s supply.

Traders are also keeping tabs on negotiations between Western powers and Iran to reinvigorate a nuclear deal that could see the Persian Gulf country’s crude exports return to the global market.

Additionally, US inventories rose more-than-expected last week, with the American Petroleum Institute posting a 6 million barrel increase last week. The official report from the Energy Information Administration is expected next Thursday, after the public holiday weekend.

As of 1:05 pm, US crude oil futures rose 8.3% to $ 99.81 a barrel, while oil futures rose 8.1% to $ 101.61 a barrel, outperforming the $ 100 a barrel for the first time in more than seven years.

RBOB gasoline futures rose 6% to $ 3.0469 per gallon.

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