Daily market review

United States

Equities seesawed in ranges Monday with late bargain hunting helping the indexes recover from an afternoon selloff on negative Ukraine headlines. The Dow Jones industrial average fell 0.5 percent, the S&P 500 eased 0.2 percent and the NASDAQ gained 0.4 percent.

Late buying in megacaps, including Apple, up 0.2 percent, Microsoft, up 0.5 percent, and Google, up 0.3 percent, helped the stocks and the NASDAQ move back into positive territory.

Major indexes rose in the morning with Tesla (up 7.5 percent) bolstering consumer discretionary stocks and other megacaps seeing dip buying. The advance faltered as initial talks between Russia and Ukraine showed no progress, as reports suggested Russia was escalating its assault on Ukrainian cities, and the Kremlin issued new threats of retaliation against Western sanctions. Risk aversion pushed investors back toward US Treasuries and other safe havens. Declining yields hit banks, including JP Morgan, down 4.2 percent. Coca-Cola, down 1.0 percent, weighed on consumer staples.

Reopening stocks suffered, including restaurants, and airlines, and travel & leisure. Auto components suffered from supply chain worries on the Ukraine conflict, including Michelin, down 3.5 percent.

On the positive side, rising crude oil prices lifted energy stocks, and higher commodities prices helped industrial metals. Geopolitics supported defense stocks, including Lockheed Martin, up 6.7 percent. Solar energy stocks advanced on the view that Europe will press harder to reduce its dependence on Russian fossil fuel.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$2.08 to US$100.99 while spot gold rose US$19.91 to US$1,909.13. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond fell 11 basis points to 2.17 percent and the 10-year note dropped 13 basis points to 1.84 percent.


European equities ended down on fallout from the Ukraine crisis, with banks hit by tightening financial sanctions against Russia. The Europe-wide STOXX 600 declined 0.1 percent, the German DAX lost 0.7 percent, the French CAC down 1.4 percent and UK FTSE 100 dipped 0.4 percent.

Banks tanked with Deutsche Bank off 6.2 percent and UniCredit off 8.1 percent. Automakers were hit hard on supply disruptions flowing from the crisis, with Volkswagen off 4.3 percent and Renault off 6.6 percent.

Among companies in focus, BP dropped 7.4 percent after it announced it would exit from its stake in Rosneft, the Russian-state-controlled energy giant, which fell 42 percent in London trading. Gazprom, another state-controlled energy company, dropped 53 percent as Royal Dutch Shell was expected to follow suit. Finnair, the Finnish airline, lost 21 percent after Russian airspace was closed. Pharma GlaxoSmithKline fell 1.2 percent after halting a clinical trial for a vaccine for respiratory virus.

On the positive side, defense stocks rallied with an extra boost from Germany's move to increase defense spending, including Rheinmetall, up 26 percent, and ThyssenKrupp up 12 percent, and Dassault, up 7.9 percent.

Asia Pacific

Asia/Pacific markets recovered early declines to end slightly higher on a report that Ukraine and Russia would hold talks. Earlier, equities declined on news that President Vladmir Putin had raised the alert level for Russia's nuclear weapons, and that Western allies had stepped up economic sanctions against Russia.

Chinese stocks edged up with the CSI 300 index up 0.2 percent and the value-stock heavy Shanghai composite up 0.3 percent. Among sectors, energy and utilities fared best while consumer discretionary and real estate lagged. Hong Kong lagged the region as the Hang Seng index declined 0.2 percent, with strength in banks offset by losses in real estate.

The South Korean KOSPI gained 0.8 percent. Indian equities improved as the BSE Sensex rose 0.7 percent, with oil & gas, metals, and utilities leading.

Japan's Nikkei 225 rose 0.2 percent and the TOPIX gained 0.6 percent with value stocks leading. Best sectors were metals, mining, and marine transportation, followed by autos and banks. Lagging were services, electric appliances, and wholesalers.

The Australian All Ordinaries index rose 0.7 percent with a boost from materials and energy as commodities prices advanced in response to the Ukraine crisis.

Looking ahead*

In Asia/Pacific, reports on South Korean external trade, Taiwan PMI manufacturing, Japanese PMI manufacturing final, Chinese CFLP manufacturing PMI, Chinese PMI manufacturing, and the Reserve Bank of Australia policy announcement are scheduled. In Europe, German retail sales, Swiss SVME PMI, French PMI manufacturing, German PMI manufacturing, Eurozone PMI manufacturing, UK M4 money supply, UK PMI manufacturing final, Italian CPI, and German CPI reports are due. In North America, Canadian monthly and quarterly GDP, US PMI manufacturing, US ISM manufacturing, and US construction spending reports are on tap.

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