North American Morning Briefing: Stock Futures Up, Oil Rises, Ukraine Diplomacy in Focus

Durable Goods for February; Current Account for 4Q; Weekly Jobless Claims.

Opening Call:

Stock futures rose on Thursday as investors monitored developments from the Russia-Ukraine war, with leaders including President Joe Biden meeting in Europe to discuss the conflict and potentially more sanctions on Russia.

Leaders from NATO are meeting amid expectations that the Western military alliance will deploy troops to countries in Central and Eastern Europe. Biden will also attend a summit of both the G-7 group of countries and the European Union, later on Thursday. Investor attention will center on whether new sanctions on Russia, and particularly its energy exports, could be rolled out.

"It's now been one month since the Russian invasion of Ukraine began, and without a doubt it remains the most significant ongoing story in markets," said Henry Allen, an analyst at Deutsche Bank. "We'll have to wait and see what further measures might be announced today, but resistance to a full embargo on Russian oil and gas is very much present for now."

The impact of Russia's invasion of Ukraine continues to roil commodities, with energy prices shooting up on Wednesday after Moscow said it would only accept payment for its exports in rubles, which have rapidly depreciated since the start of the war.

"There is little sign the pedal is coming off the accelerator for energy prices, amid a fresh round of volatility that has hit markets after Russia moved to retaliate in the economic war being waged," said Susannah Streeter, an analyst at broker Hargreaves Lansdown.

Stocks to Watch:

Shares of Nikola were up 11% in premarket trading after the company confirmed that production has begun on its battery-electric commercial truck, the Tre. The startup said production began this week at its factory in Coolidge, Arizona.

The company made the announcement at an analysts' presentation on Wednesday. Nikola is scheduled to hold an investor day Thursday beginning at 4:15 p.m. Eastern time.

"We are laser-focused on delivering vehicles and generating revenue as the global leader in zero-emission transportation and energy infrastructure solutions," a spokesperson told MarketWatch.

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Forex:

The dollar firmed broadly on safe-haven demand as investors awaited the outcome of meetings between Joe Biden and NATO, G7 and EU leaders to discuss Russia's attack on Ukraine.

With major countries looking at reducing Europe's dependence on Russian gas, if Europe were to "walk away from" Russian oil, oil prices would likely rise further, raising concerns about further inflation and damage to economic growth, Swissquote said in a research note.

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The Japanese yen's recent weakness has helped define a new order for safe-haven currencies linked to whether they are energy importers or exporters as the Ukraine war pushes up oil and gas prices, Rabobank said.

"Measured since the start of the war in Ukraine, the best performing G10 currencies are the commodity producers with the JPY and the European currencies lagging behind," Rabobank forex strategist Jane Foley said in a note.

However, it must be stressed that the yen's losses are exacerbated by Bank of Japan's continued ultra-loose policy stance, she said. USD/JPY rises 0.4% to 121.658 after earlier hitting 121.750, its highest level since December 2015, according to FactSet.

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The Swiss franc fell after the Swiss National Bank reiterated its willingness to intervene in the forex market to counter upward pressure on the currency, which it said "remains highly valued."

The SNB left its policy rate and interest on sight deposits at minus 0.75% and said it was retaining its expansionary monetary policy. However, it warned of risks to inflation due to the tight supply of raw materials, which could result in second-round effects on inflation.

The SNB also reiterated concerns about strength in property markets and said it would continue to monitor developments in mortgage and real-estate markets closely.

Bonds:

In bond markets, 10-year U.S. Treasury yields were up to 2.339% from 2.320%.

In the current uncertain environment, where the war in Ukraine and sanctions against Russia will likely lead to a greater dispersion of growth and inflation outcomes among countries and regions, Pimco tends to favor portfolio flexibility and liquidity to respond to events and potentially take advantage of opportunities.

In fixed-income investments, Pimco expects to target modest duration underweights given current levels, the upside inflation risks, and the prospect for central bank tightening that prioritizes anti-inflation credibility over near-term growth concerns.

The asset manager also expects to de-emphasize curve positions, with the broad global tightening cycle now under way. Pimco continues to see Treasury Inflation-Protected Securities as a reasonably priced way to mitigate upside U.S. inflation risks.

Commodities:

Oil ticked higher in Europe, caught between supply fears and the prospect of an Iran deal, after a U.S. official said progress had been made in talks over Tehran's nuclear ambitions, according to a Reuters report.

That lifted hopes Iranian crude could flow back to global markets, easing some of the tightness resulting from Russian supplies lost following the invasion of Ukraine. Still, fears that fresh sanctions could hit Russian oil exports remain.

SPI Asset Management said Iran's roughly 1.3 million barrels a day "would hit the oil price under normal circumstances but represents only a fraction of what might be lost from Russia."

Read Barrons.com: OPEC+ Isn't Going to Fling Open the Oil Taps. Filling Your Gas Tank Will Cost More

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Nickel prices jumped by their maximum daily limit on supply disruption worries after Vladimir Putin's request that Russian gas exports be paid for in rubles prompting fears that other commodities could face similar measures, said ANZ. Benchmark nickel prices on the LME rise by 15% to $37,235 a metric ton.

The nickel market is still reeling from an unprecedented rise in prices which led the LME to halt trading for days and impose daily price limits. The volatility is prompting investors to close their nickel positions and steer clear of the metal altogether until the market cools, reducing liquidity and potentially exacerbating sharp price moves, ANZ said.

Gold also strengthened 0.4% to $1,945.30 a troy ounce.

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March 24, 2022 06:11 ET (10:11 GMT)