From Marc to Market:
Overview: Russia's formal recognition of the two separatist regions in eastern Ukraine kicked out the legs upon which hope of diplomatic solution stood. Putin's decision to send in troops into the regions is seen the start of the war. The US, UK, and EU are preparing sanctions. As one might expect, global equities fell, and bond yields have edged lower. The large equity markets in the Asia Pacific region were off more than 1%. Europe's Stoxx 600 gapped lower and subsequently filled the gap, and is trying to snap a three-day slide. S&P futures have recouped most of their earlier declines, while NASDAQ futures are off about 0.4%. The US 10-year yield is off slightly near 1.93% after earlier slipping below 1.90%. Most European benchmark narrowly mixed. The foreign exchange market reaction is somewhat counter-intuitive. The Scandis and Antipodeans lead the major currencies higher. The yen, Swiss franc, and sterling are nursing modest losses. Among emerging market, central European currencies are posting small gains, while most of the freely accessible currencies are weaker. The JP Morgan Emerging Market Currency Index is recovering from inital losses after posting small declines over the past two sessions. Gold had rallied to new highs, a bit above $1914 but sold-off to almost $1895 in early European turnover where new bids emerged. Crude oil jumped on the news and the April WTI contract neared $95. It is now near $94 after finishing last week a little above $90. Natural gas prices have risen as well. The US contract is up about 4.0%, while Europe's benchmark has risen by around 7.5%. Iron ore fell by 2% after advancing 5% yesterday, and copper is heavy for a third session.
Asia Pacific
Beijing's new regulatory checks on links to Ant is taking a toll on tech shares in China and Hong Kong. Its efforts in coal and steel are seen boosting lending as well. The surge in lending appears to have taken some of the urgency seen for more rate cuts. Four large banks in Guangzhou, home of Evergrande, announced cuts in mortgage rates yesterday. Still, the soft CPI and next week's February PMI, where more weakness is expected may fan expectations. Moreover, while the US and Europe lift Covid-related restrictions, Hong Kong and China appear to be moving in the opposite direction. While China is in favor of checks on NATO, the recognition of separatist forces tends not to find much favor in Beijing, which is wary of such ploys being used against it.
New record fatality tolls in Japan, and the delayed booster rollout undermining support for Japan's cabinet. The latest poll showed an 8.3 percentage point slide to 43.4%. Approval of the Kishida government's handling of the pandemic fell 6.3 percentage points to 38.9%, just above the disapproval rating of 37.9%. Recall that last week, the government lowered its overall economic assessment for the first time in five months. The extended social restrictions are due to end March 1. An upper house election will be held in July, and it could determine the political future of Kishida....
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