Russia is facing severe disruption to its exports of all commodities from oil to grains

Stock markets fell and oil prices surged today as investors grew increasingly concerned about the consequences of Russia's invasion of Ukraine. Asian markets ended the day on a mixed note. Hong Kong's Hang Seng lost as much as 1.6%, before closing down 0.2%. Japan's Nikkei 225 and Korea's Kospi erased earlier losses and were up 0.2% and 0.8%, respectively. 

China's Shanghai Composite was up 0.3%. On Wall Street, Dow futures were down 490 points, or 1.4% at 3:40 a.m. ET. S&P 500 futures fell 1.9% and NASDAQ futures were 1.7% lower. 

Economic Calendar

Global markets had been turbulent last week after Russian President Vladimir Putin launched an invasion of Ukraine, and the pain has spread beyond stocks. The Russian ruble plummeted as much as 40% Monday against the US dollar after Western countries announced new sanctions against Russia, including expelling certain Russian banks from SWIFT, the high-security network that connects thousands of financial institutions around the world.

Russian rouble plunged to a record low after Russia launched an invasion of Ukraine

Dow Jones Industrial Average

The Dow Jones Industrial Average unchanged 0%. The biggest gainers of the session on the Dow Jones Industrial Average were Johnson & Johnson, which unchanged 0% or 0 points to trade at 163.36 at the close. 3M Company unchanged 0% or 0 points to end at 147.62 and UnitedHealth Group Incorporated was unchanged 0% or 0 points to 467.81 in late trade. The biggest losers included Walt Disney Company, which unchanged 0% or 0 points to trade at 151.36 in late trade. Visa Inc. Class A unchanged 0% or 0 points to end at 222.69 and Microsoft Corporation 0% or 0 points to 287.93.

NASDAQ 100

The NASDAQ index is unchanged 0%. The top performers on the NASDAQ Composite were Inspirato Inc. which was unchanged from 0% to 46.00, Guardforce AI Co Ltd which was unchanged 0% to settle at 0.38, and CarGurus which was unchanged 0% to close at 34.44. The worst performers were Baudax Bio Inc. which was unchanged 0% to 4.2300 in late trade, Everbridge Inc. which was unchanged 0% to settle at 45.54, and LivePerson Inc. which was unchanged 0% to 24.59 at the close.

Wall Street is gauging the further effect of the conflict between Russia and Ukraine on asset prices

Oil

Oil prices jumped today as Western allies imposed more sanctions on Russia and blocked some Russian banks from a global payments system, which could cause severe disruption to its oil exports. U.S. West Texas Intermediate (WTI) crude was up $4.19, or 4.6%, at $95.78 a barrel after hitting $99.10 in early trade. 

Moves by the U.S. and Europe to remove certain Russian banks from the SWIFT system have raised fears of a disruption to supply of some sort in the near term. The risk to supply is the greatest we've seen for some time and it comes in a tight market. 

Russia is facing severe disruption to its exports of all commodities from oil to grains after Western nations imposed stiff sanctions on Moscow and cut off some Russian banks from the SWIFT international payment system. Russian crude oil grades were already hammered in physical markets. Russia accounts for about 10% of the global oil supply. Goldman Sachs bank raised its one-month Brent price forecast to $115 a barrel from $95 per barrel previously.

Markets seemed to take cheer from news of talks between the U.S. and Russia about Ukraine

Precious and Base Metals

Gold prices reversed course to slide 1% today, and palladium also slipped, as Russia's invasion of Ukraine triggered sharp swings in the precious metals market. Spot gold slipped 0.9% to $1,887.05 per ounce, swinging between gains and losses through the session. U.S. gold futures settled 2% lower at $1,887.60. 

We think the price drop is premature, there is a risk of further escalation in the conflict and it could be just a temporary correction. Some market participants believe the sanctions imposed by the West on Russia are not tough enough. Prices of the safe-haven metal rallied more than 3% to as high as $1,973.96 in the last session after Russia attacked Ukraine. They retreated more than $90 from Thursday's highs. 

The dramatic rise followed by the just as dramatic fall is very technically motivated. A rebound in the global shares markets also weighed on the safe-haven metal, even as analysts expect market volatility to remain elevated. The risk premium and safe-haven demand will continue to support gold, but the upside is limited by the possible rate hike by the U.S. Federal Reserve this March. Palladium dropped 1.3% to $2,372.19. The metal touched $2,711.18 on Thursday, its highest since July. 

Elliot Waves trading idea for Gold, Silver and Gdx

Palladium is the precious metal most exposed to Russia's invasion of Ukraine. With Russia being the largest producer of palladium, the likelihood of ever-stricter sanctions on the country and its companies raises the prospect of a supply shortage boosting prices. Spot silver fell 0.6% to $24.05 per ounce and platinum eased 0.5% to $1,051.88.

Traditional Agricultures

Wheat futures tumbled on Friday in a profit-taking setback after peaking earlier at the highest level since mid-2008 as investors turned back to equities and traders assessed potential disruption to supplies from Russia’s invasion of Ukraine. Corn eased from Thursday’s eight-month peak, while soybeans slipped from a 9-1/2-year top in the previous session as traders liquidated long positions ahead of the weekend. The market continued to gauge the consequences on grain and oilseed supplies from the conflict between two of the world’s biggest exporters. There’s a big shift in money flow ahead of the weekend.

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