Daily market review

United States

Equities faced renewed selling late Tuesday after a day of volatile, uncertain trading, with traders reacting to unconfirmed reports that Russia would suspend its commodities exports through year end. The Dow Jones industrial average lost 0.6 percent, the S&P 500 fell 0.7 percent, and the NASDAQ declined 0.3 percent.

Markets ticked up at midday in a short-covering bounce as investors reacted to an old report that Ukrainian President Zelensky was not inclined to pursue NATO membership, a repeat of what he said Monday. Oil prices rose in the morning and equities retreated after the US announced it would bar Russian energy imports, but risk assets rebounded after that news as some saw it as the last step in the US sanctions process. The UK said it too would phase out Russian energy imports by year end. Germany and other EU nations made no such pledge, even as they stepped up efforts to shift toward other energy sources.

Energy stocks outperformed on rising oil prices. Alternative energy stocks remained well bid, Most other sectors declined, with growth lagging, and the FANMAG stocks depressing the market. Defensive sectors held up better, including consumer staples, health care, and utilities.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil jumped US$4.97 to US$128.33 while spot gold rallied US$52.18 to US$2050.96. The US dollar was mixed against major currencies. Yields on the US Treasury 30-year bond rose 5 basis points to 2.23 percent, and the 10-year note rose 8 basis points to 1.85 percent.


Equities were mixed in choppy trading with some sectors, including banks and utilities, finding a bid after recent steep declines. Energy and mining stocks advanced with the latest surge in oil and other commodities prices helping UK markets outperform. The Europe-wide STOXX 600 declined 0.5 percent, the German DAX was flat, the French CAC lost 0.3 percent, and the UK FTSE 100 was up 0.1 percent.

Risk appetite drew support from reports that the European Union was considering joint bond sales to fund a relief package to counter fallout from the war, and to fund Europe's diversification away from Russian fossil fuel toward sustainable energy.

Most other sectors ended weaker on Ukraine worries. Lagging were media, technology, food & beverage, personal & household goods, travel & leisure, telecom, and health care.

Among companies in focus, Schaeffler, the auto parts maker, rose 8 percent on an earnings beat but suspended its guidance due to uncertainty around Ukraine. Dufry, the retailer, gained 4.4 percent on an earnings beat. Adidas, the sportswear giant, rose 8.3 percent. Uniper, the German utility, rose 8 percent after the German government said it could buy Russian natural gas to assure supplies. On the downside, Danone, the food group, fell 1.2 percent on disappointing guidance.

Asia Pacific

Asia-Pacific equities dropped as commodity prices surged again amid expectations for a US-led ban on Russian energy imports and the Ukraine conflict appeared likely to continue.

Japan's Nikkei 225 fell 1.7 percent and the broader TOPIX lost 1.9 percent on the Ukraine trade. Value stocks led the selloff but all sectors declined amid widespread risk aversion.

Rising commodities prices hit mainland Chinese stocks with the CSI 300 index down 2.0 percent and the value-stock heavy Shanghai composite off 2.4 percent. Hong Kong's Hang Seng index fell 1.4 percent. Investors focused on concerns that European economies would be disrupted by the Ukraine crisis, alongside widening supply disruptions and the impact of surging inflation.

The Taiwan Taiex lost 2.1 percent, the South Korean KOSPI and the Indian BSE Sensex both fell 1.1 percent on the Ukraine trade.

Australian equities retreated as materials and energy stocks fell back with the All Ordinaries index down 0.9 percent. Commodities markets remained volatile amid conflicting headlines on diplomatic developments from Ukraine. Defensive sectors including health care and consumer staples managed gains while energy, materials, and utilities lagged.

Looking ahead*

In Asia/Pacific, Japanese GDP figures are scheduled. In Europe, the Italian industrial production report is due. In North America, the US JOLTS job openings report is on tap.

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