US stocks finished higher yesterday, with the S&P 500 index and Dow industrials enjoying their third straight session of gains ahead of today’s talks between Russia and Ukraine.
Russia’s President Vladimir Putin justified the invasion on the basis that Ukraine be "denazified". Russia will no longer demand that this occur.
Meanwhile, the Dow jumped about 93 points, or 0.3%, finishing near 34,955, after flipping positive in late afternoon trade. The S&P 500 gained 0.7% and the Nasdaq Composite Index moved up 1.3%.
As for the ASX, it too should rise this morning after ASX futures closed 0.5% higher to 7,415.
Here’s what we saw (source Commsec):
- The Euro held between US$1.0945 and US$1.1000 and was near US$1.0985 at the US close.
- The Aussie dollar fell from highs near US75.38 cents to lows near US74.66 cents and was near US74.90 cents at the US close.
- Global oil prices fell by near 7% on Monday.
- The Brent crude price fell by US$8.17 a barrel or 6.8% to US$112.48 a barrel.
- The US Nymex crude price fell by US$7.94 or 7.0% to US$105.96 a barrel.
- Base metal prices rose by as much as 1% on Monday with lead recording the biggest gain.
- Nickel bucked the trend, down 7.8%.
- The gold futures price fell by US$14.40 or 0.7% to US$1,939.80 an ounce.
- Spot gold was trading near US$1,920 an ounce at the US close.
- The iron ore futures price fell by US14 cents or 0.1% to US$150.03 a tonne.
Looking at oil, fears of falling Chinese demand have hurt after Shanghai launched a two-stage lockdown to contain a surge in COVID-19 infections. Reuters also noted, "Hopes for progress in peace negotiations between Russia and Ukraine, which could start in Turkey on Tuesday, also weighed on prices."
“China oil demand is approximately 15 million barrels per day,” said Andy Lipow, president of Lipow Oil Associates in Houston. “The magnitude of sell-off reflects fears that COVID-19 lockdowns in China could spread, significantly impacting demand at a time when the oil market is trying to find alternatives to Russian oil supplies.”
Australian market
According to an ANZ-Roy Morgan poll, inflation expectations continue to surge.
While consumer confidence was steady last week, weekly inflation expectations rose 0.4 percentage points to 6.4% last week – its highest weekly reading since June 2012. The four-week moving average rose 0.3ppt to 5.8%.
“Consumer confidence is very weak given the strength of employment, which we think is directly linked to concerns over cost-of-living pressures,” ANZ’s head of Australian economics, David Plank said.
“It will be interesting to see whether the measures expected in the Federal Budget provide a boost to confidence.”
Meanwhile, tonight is everybody’s most exciting night of the year … budget night!
US markets
Oil producers fell in response to a 7% slide in the oil price. Bank stocks fell 1.0% in response to lower longer-term yields. Reuters reported, "Electric-car maker Tesla jumped 8.0% after saying that it will seek investor approval to increase its number of shares to enable a stock split."
Shares in Apple rose 0.5% after a report said the company was planning to cut iPhone and AirPod output.
The Tesla surge
If you have shares in Tesla, you would be a happy camper, after its shares surged yesterday after the electric carmaker announced plans to seek investor approval to split stocks.
The move is backed by the board which has agreed to increase the number of shares in the company to allow for the split.
Tesla's valuation jumped on the news, however, operations in Shanghai are currently suspended due to COVID-19 lockdown measures.
However, as MarketWatch reports, “What might be more important for long-term investors considering Tesla’s stock is that its gigafactory in Berlin has opened, adding an estimated 500,000 electric vehicles to the company’s annual production capacity.
“The opening of Tesla’s third factory, during a time of such high demand for its vehicles, raises a very interesting question, considering that its stock was down 4% for 2022 through the close March 25: How much more of a profit can Tesla earn on this increased capacity?
“The answer is that the consensus 2022 earnings-per-share estimate for Tesla, among analysts polled by FactSet, has increased 24% to $10.87 from $8.78 at the end of 2021.”
That’s a dramatic increase.
European markets
Were higher on Monday.
Leading the gains were automakers up 0.8%, utilities 1% higher and construction up 0.5%. Oil stocks fell 2.1% in line with a lower oil price. Shares in Barclays fell 4.1% after disclosing around a 450 million pound (US$591.80 million) loss on mishandled structured products.
The pan-European STOXX 600 index rose by 0.1%. The German Dax index lifted by 0.8% but the UK FTSE index both fell by 0.1%.
In London trade, shares in Rio Tinto fell 1% but BHP shares rose 0.8%.
European shares gained on Monday, led by automakers and defensive sectors, as hopes for a peace deal between Russia and Ukraine boosted sentiment, while a drop in crude prices pressured oil stocks.
Credit rating agency S&P Global cut its eurozone growth forecast for the year to 3.3% from 4.4%, pointing to higher energy prices hitting households’ spending power.
German chemicals giant BASF gained 1.6% after HSBC upgraded the stock to “buy”, saying “resilient demand” will likely help first-quarter earnings.
Carlsberg gained 3.5% after the Danish brewer announced it would exit Russia along with brewing giant Heineken.