Global Stocks Slide Amid Ongoing Ukraine Conflict and Intensified Sanctions; Peace Talks Begin at Border

The Russian ruble has plunged by 30%, while prices for oil, natural gas, and grains have surged significantly.

Worldwide stock markets have declined in response to the ongoing conflict in Ukraine, even as diplomatic talks aimed at ending the war have commenced along the Belarus border. Western nations have escalated sanctions against Russia, targeting its financial infrastructure by excluding key Russian banks from the SWIFT payment system. This geopolitical tension has driven up prices for commodities heavily influenced by Eastern European dynamics, including oil, gas, and grains.

Highlights

• Global stock indices dropped amid continued fighting in Ukraine and the opening of peace discussions at the Belarus border.
• Sanctions have started to impact Russia’s financial sector, prompting the central bank to more than double its key interest rate due to the ruble's sharp decline.
• The U.S., EU, UK, and Canada announced the removal of selected Russian banks from the SWIFT network over the weekend.
• Commodity prices for oil, gas, and grains, which are sensitive to Eastern European geopolitical developments, have increased.

In response to the ruble’s nearly 30% depreciation against the U.S. dollar following sanctions, Russia’s central bank raised its benchmark interest rate to 20%. This move aims to stabilize the currency and financial markets.

Last week, U.S. equities rebounded from a steep sell-off, with the Dow Jones Industrial Average climbing over 2.5%, the S&P 500 gaining 2.2%, and the Nasdaq increasing by 1.6% on Friday. Weekly performance showed the S&P 500 up 0.8%, the Dow slightly down 0.1%, and the Nasdaq up 1.1%.

Government bond yields fell sharply, with prices rising as investors sought safer assets. The 10-year U.S. Treasury yield dropped to 1.92%. Oil prices surged over 5%, with light sweet crude exceeding $96 per barrel and Brent crude futures trading above $102 per barrel. Bitcoin also rose by more than 1%, surpassing $38,000.

This week, Federal Reserve Chair Jerome Powell is scheduled to testify before Congress regarding the economy and monetary policy. Additionally, the government will release the latest employment report on Friday, with expectations of a 450,000 increase in U.S. payrolls following a 467,000 gain in January. The unemployment rate is projected to rise to 3.9% in February, up from 4% in January.

Today, the Institute for Supply Management will publish the Chicago Purchasing Managers Index for February, with economists forecasting a reading of 63, slightly below January’s figure by two points.

Companies reporting earnings today include HP Inc., Lucid Group Inc. (LCID), Workday Inc. (WDAY), and Zoom Video Communications Inc. (ZM). Later this week, earnings reports from Target Corp. (TGT), Nordstrom Inc. (JWN), Dollar Tree Corp. (DLTR), and Best Buy Inc. (BBY) are anticipated.

Today's Top Stories: Brief Updates

SpaceX’s Starlink satellite internet service has been activated in Ukraine, according to CEO Elon Musk, providing connectivity amid power outages caused by Russia's invasion.

Norway’s sovereign wealth fund plans to oppose Apple Inc.'s (AAPL) executive compensation plan, which includes an $82 million stock award for CEO Tim Cook. The $1.3 trillion fund holds over 1% of Apple’s shares, making it the world’s largest.

Chinese electric vehicle manufacturer NIO intends to list on the Hong Kong Stock Exchange on March 10, amid increasing regulatory challenges for Chinese firms listed in the U.S. and China.

The U.S. Securities and Exchange Commission (SEC) has proposed new rules requiring short sellers to disclose more detailed information about their positions, enhancing transparency around significant short bets on individual stocks.

Huawei has launched the MatePad Paper, a competitor to Amazon’s Kindle e-reader, aiming to strengthen its consumer electronics division, which has been impacted by U.S. sanctions.

Lordstown Motors Corp. (RIDE) will release its fourth-quarter earnings and is expected to provide updates on its electric truck production, which has been delayed due to supply chain issues.

Main Feature: BP Divests Stake in Russian Oil Firm

BP Plc (BP) is withdrawing from its partnership with Russian energy giant Rosneft Oil Co., citing Russia's actions in Ukraine. BP’s shares dropped over 7% following the announcement, though they remain up approximately 12% year-to-date and 25% over the past year.

BP has held a 20% stake in Rosneft since 2013 and has operated in Russia for more than three decades. The company faced mounting pressure from U.K. officials concerned about its exposure. The sale of this stake could lead to a potential loss of up to $25 billion, with the asset currently valued at around $14 billion.

Rosneft accounts for roughly one-third of BP’s oil and gas production, and BP will no longer receive dividends from the company, which amounted to approximately $640 million last year and could exceed $1 billion in 2022. Additionally, BP may incur $11 billion in foreign exchange losses related to this stake.

BP is among the most heavily exposed major oil and gas firms to Russia. Despite the divestment, BP remains on course to spend about $4 billion annually through 2025 on share repurchases.

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