Eurozone (11:00 CET) CPI for Jan expected at 5.1% YoY
Joe Biden unveiled sanctions targeting Russia's sale of sovereign debt abroad and the country's elites, in response to what he called "the beginning of a Russian invasion of Ukraine." This "first tranche" of penalties came after the U.K. and EU announced some restrictions. The measures stopped short of the devastating steps the U.S. and its allies have threatened. A meeting between top U.S. and Russian diplomats set for tomorrow was called off, Antony Blinken said.
Russia's State Duma authorized sending troops into two separatist enclaves of Ukraine, but Vladimir Putin said he's not deploying them yet. Moscow withdrew its embassy employees from Ukraine. NATO chief Jens Stoltenberg said the Kremlin is still preparing for a "full-scale attack," despite Russia's repeated denials of such intentions. Ukraine Foreign Minister Dmytro Kuleba said his Plan A is to use diplomacy to prevent further escalation, but if that effort fails troops are ready to defend the nation. Biden won't hold a summit meeting with Putin, the White House said.
Markets shrugged off news of the sanctions. European and Asian shares rose with U.S. futures. Oil edged up, while the dollar, gold and Treasuries dipped. Other commodities from cotton to nickel climbed amid fears the Ukraine standoff could disrupt supplies.
The RBNZ raised interest rates for a third straight meeting and signaled it will need to hike more than previously expected to contain inflation, sending bond yields and the currency higher. Authorities hiked the official cash rate by 25 bps to 1%. The RBNZ now sees the rate climbing to 2.5% over the next 12 months and peaking at about 3.25% at the end of 2023. In November, it forecast a peak of about 2.5%.
KKR valued bottling company Refresco at 7 billion euros, people familiar said. It's buying a majority stake from PAI Partners and BCI. Activision will delay the release of a Call of Duty game that was planned for next year, people familiar said. Brevan Howard had one of its best-ever days of trading on Feb. 4 as complex option bets on short-term euro rates paid off, people familiar said. Eskom may sell distribution assets as the prospects of the government taking over about half of its 392 billion rand ($26 billion) in obligations dim, people familiar said.
Earnings: Barclays announced plans to buy back up to 1 billion pounds of shares after its CIB revenue came in just a hair below estimates. Anna Cross was named CFO, replacing Tushar Morzaria, who will retire. Also: Rio Tinto will pay a record final dividend of $6.7 billion and a special dividend of $1 billion after annual profit almost doubled to a new high. Danone had its weakest profitability since 2015 with adjusted operating margin narrowing to 13.7%, as expected. Virgin Galactic gained in extended trading on a narrower-than-expected loss. Stellantis expects to deliver another year of double-digit returns in 2022 after the carmaker focused production on its most profitable vehicles.
Virus: HSBC will temporarily close its retail branches in Hong Kong on Saturdays. China is racing to defuse omicron flareups in Wuhan. Hospitalizations in New York state fell by 1,000 in a week, and Chicago said it would end its mask mandate.
The technical backdrop for U.S. stocks is crumbling. The S&P 500's latest retreat pushed it below its 200-day moving average, a bearish omen indicating it may slide toward a much lower floor. The gauge is "living on the edge of support" around 4,300, said Craig Johnson at Piper Sandler. A breach below that line would prompt him to reevaluate his bull thesis. Richard Ross at Evercore said his work suggests the S&P 500 may face a deep drop. A break below 4,200 would herald a slide to 3,600.
For decades, Goldman has cultivated close ties with departing execs, nurturing the corporate world's most powerful alumni network. They often establish lucrative, second careers and then enlist Goldman for advice, deals and trades. But new pressures are leading to strained exits at the banking powerhouse.
Ukraine tensions have triggered some volatility in European markets, but fundamentals aren't showing a huge level of stress just yet. Volatility on Monday spiked to the highest since October 2020 but then quickly retreated, while the last two jumps in the Euro Stoxx 50 Volatility VSTOXX led to a subsequent rebound in equities.
The ECB should decide on a first rate increase in the summer, before the end of asset purchases, followed by a second move at the end of the year, Governing Council member Robert Holzmann told NZZ. As one of the bank's leading hawks, he's made similar sounds before, but the proposed second 2022 hike suggestion is new. Christine Lagarde has ruled out the idea of increasing rates before the end of net asset purchases.
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