S&P500
The US market tried to post gains on Tuesday, but fell by the close under strong negativity from Ukraine and a fresh rise in oil.
The Dow lost 0.6%, the NASDAQ fell 0.3%, and the S&P 500 tumbled 0.7% on Tuesday.
In Asia, Japan's stock index gained 0.1%, China's fell 2.3%.
Russia-Ukraine conflict, sanctions and their consequences, remain major news for the markets. Situation on the fronts in Ukraine has changed little over the past few days. There are some attempts by Russian troops to move towards blockading Kiev and Kharkiv, but there are hardly any significant changes on the 14th day of the military operation. Yesterday Biden announced a ban on oil imports from Russia. Meanwhile, Europe said it was not prepared to do the same. Europe will continue to buy Russian oil and gas. Oil reacted with a new rise, to USD 130/bbl. Brent is trading at $125.
The Central Bank of Russia has introduced restrictions on cash currency transactions for Russians from March 9 to September 9. Now it is possible to withdraw cash currency from a bank account no more than $10,000. Banks are not allowed to sell cash currency to the public. Thus, the only legal way to buy cash currency remains a brokerage company. However, when buying currency through a broker, the Central Bank set a minimum commission of 12% of the purchase amount a few days ago.
McDonald's, Starbucks and Coca-Cola announced their withdrawal from Russian markets yesterday. However, it is possible that this decision could be reconsidered if there is much progress towards peace in Ukraine. Negotiations between Russian Foreign Minister Lavrov and Dmitriy Kuleba are scheduled for March 10 in Turkey. This is a much higher level of contact than in the negotiating group that has met three times.
Yesterday it was reported that Russia's debt ratings were downgraded again by Fitch Moody's to default and pre-default, respectively.
The Central Bank of Russia has decided not to open trading on the MICEX stock market on March 9 amid the crisis in the financial system. There will be an additional announcement about tomorrow's trading.
Norway reiterated that its gas supply capacity is already fully utilised and cannot be increased. Gas prices on the ICE exchange yesterday were huge, $3,000 per barrel.
The S&P 500 trades at 4,170 and is expected to be in the range between 4,130 and 4,210.
The US market struggled yesterday to start a rally. However, the surge in oil prices following the ban on oil supplies from Russia to the US took away optimism.
As already said, Russia will continue to sell oil to Europe. The US has enough oil of its own. This decision will not physically affect the supply/demand balance in any way. Biden's decision was essentially another signal to Putin that Russia should finally stop its actions in Ukraine. The signal is that if the escalation in Ukraine continues, EU countries will also stop exporting oil and gas from Russia.
The US economy remains strong and market growth is still very likely. Inflation data for February will be released tomorrow.
The US trade balance remained flat at $89bn for the month.
USDX is at 98.95 and is likely to trade in the range between 98.60 and 99.20.
The dollar is holding on to the highs of the year as it plays the role of a defensive asset during the crisis in Ukraine.
USD/CAD trades at 1.2870 and is seen moving in the range of 1.2800-1.2900. The dollar gained strongly against the Canadian currency despite record oil prices. The dollar's role as a defensive asset prevails.
The US market is still likely to rise, as prices are attractive and, in fact, the US is not threatened by anything.
