- US Treas: Imposing sanctions on Russia related oil
- Trump says sanctions will hopefully make Putin ‘reasonable’
- Ex-BOJ executive thinks market pricing is too dovish
- Australia NAB business conditions +6 vs +1 prior
- Canada’s Carney: The decades-long process of economic integration with the US is over
- Trump: Long meeting scheduled with Xi. Thinks something will work out
Markets:
- Gold down $2 to $4091
- WTI crude up $1.60 to $60.10
- S&P 500 futures up 7 points
- Nikkei 225 down 1.3%
- USD leads, JPY lags
The main news of the day was the US announcing fresh sanctions on Russian oil, this time hitting the two largest oil producers: Lukoil and Rosneft. We don’t have details yet on whether there will be banking or secondary sanctions but the market hasn’t waited to find out as it’s pushed up WTI crude prices above $60 after a solid rally yesterday, likely in anticipation of this. It possibly marks a new phase in the war where the west goes harder after Russian oil. The US is said to be pushing for India to stop buying Russian crude and Trump has been opening lobbying the EU to halt purchases. Ultimately, crude finds a way to market so I’d be careful chasing oil here.
In FX, the US dollar is bid to start the day as it unwinds some of the selling in US trade. It looks like more of the ebb and flow than anything macro-driven. US equity futures slightly higher don’t make the case to buy dollars. In Japan though, Takaichi has formed a government and we could be seeing the resumption of yen weakness that began when she was picked.
In equity markets, shares of Tesla are down 5% after earnings and United Rentals are down 7%. Margin pressure was a theme in both reports but revenues were good which is a decent read-through on macro demand.
India returned from a holiday and the Nifty is up 2.15%, likely due to reports yesterday of a likely deal that would bring US tariffs down to 15-16% on Indian goods.
Gold was in focus and traders were on edge as Asia ramped up. Yesterday’s heavy selling didn’t repeat though and a dip down to $4066 was picked up and gold is now close to flat at $4090 in the session.
Later we get Canadian retail sales but the market is mostly holding its breathe ahead of Friday’s US CPI report.
This article was written by Adam Button at investinglive.com.