Morning Brew February 23 2022
Senior Relationship Manager
Summary: How will the sanctions impact sectors?
Worries on the Ukraine conflict sparked risk off sentiment yesterday and trading was extremely volatile yesterday, initially equities sold off massively but could recover a good deal, at the end of the day, US Indexes closed app 1% below Friday. The S&P 500 ended down more than 10% from the January 3 high and is formally in correction.. Dax has settled down at around 14700 overnight, the USD Index at 96 and US 10 year yields recovered from 1.85 to 1.96.
EURUSD is trading at 1..1320 and GBPUSD at 1.3590, Gold at 1897 and Silver at 24.15. Bitcoin gains to 38k Oil made another 7 year high.
The US, the EU, UK as well as Japan issued sanctions against Russia, mainly targeting oligarchs and Russian businesses, Germany puts the certification for Nordstream 2 on hold.
Russian equities fell severely and we will be placing trading restrictions on a number of instruments to avoid issues.
Today the focus will be on Ukraine on the one hand but also on the impact of the sanctions on businesses. European Banks will be affected at least, more details are to be expected soon.
Peter Garnry wrote a good on equities in the current surroundings:
German equities are the weak spot in Europe which a higher negative sensitivity to the ongoing energy crisis and the Russia-Ukraine conflict. German equities are only 7% above their pre-pandemic level highlighting that something is structurally wrong and Germany has the wrong growth model. The ongoing Russia-Ukraine conflict that escalated to a new level yesterday will continue to put upward pressure on commodities, and thus also inflation, and especially energy markets making the commodity sector a must to have exposure to for equity investors. We also highlight our defence theme basket which is enjoying strong relative performance this year as military budgets could see an increase in the coming years.
Lenovo`s profit jumped 62% to an all-time high of $640 million, Home Depot falls significantly as costs weigh on Q4 earnings.
Physically Settled Futures:
CGBH2 will expire 24th February at 16:00 GMT
SUGARNYMAR22 will expire 24th February at 16:00 GMT
Key Events this Week:
Wednesday: EU HICP
Thursday: US GDP New Home Sales
Friday: German GDP, EU Consumer Confidence, Durable Goods Orders
Wednesday: Rio Tinto, Iberdrola, Stellantis
Thursday: Safran, Anheuser Bush Inbev, Axa, Deutsche Telekom, Royal Bank oc Canada. Alibaba, Moderna, Newmont Mining
Saturday: Berkershire Hathaway.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.