March 7, 2022

“Global oil prices skyrocket to highest level since 2008, hitting near $130 per barrel, as the United States and its Western allies consider a complete ban of Russian oil and natural gas imports.”

Tim Hallinan – Trading Director

Main Headlines

US jobs growth accelerated sharply last month, bolstering the Federal Reserve’s case to push ahead with a series of interest rate increases this year. Employers in the world’s largest economy added 678,000 jobs in February, the most since July, eclipsing economists’ expectations and building on an upwardly revised 481,000 positions created in January. That pushed the unemployment rate to 3.8 per cent, after it increased marginally at the start of the year. A report released by the Bureau of Labour Statistics showed that the monthly wage growth is currently flatlining, following a 0.6 per cent jump in average hourly earnings in January. Despite recent job gains employment remains 2.1mn below pre-pandemic levels. The number of job openings in the US has soared compared with historical standards, with 10.9mn unfulfilled positions at the end of last year, as the workforce experiences near record turnover.

France has urged Britain to act quickly to solve a visa blockage stopping some Ukrainian refugees from reaching the UK from Calais, as France’s interior minister Gérald Darmanin called the situation “inhumane.” Darmanin told that 150 of a total of 400 Ukrainian refugees arriving in the northern French port after the Russian invasion had been unable to cross into Britain. They had been told to go to Paris or Brussels to process visa applications, he added. Darmanin said he had asked Priti Patel, UK home secretary, to set up a special consulate in Calais to process their paperwork. In a letter to Patel, Darmanin said the British response so far was “completely unsuitable” and showed a “lack of humanity” towards refugees who were often “in distress.” Patel has insisted that Britain will not waive visa requirements for refugees seeking to join family in the UK, arguing that she fears that hostile actors could exploit such a waiver.

GBP

Sterling is stronger against euro and weaker against the dollar this morning. A group of Tory MPs has called on the UK government to improve the UK’s energy security by sharply increasing its target for “floating” offshore wind farms, which can be built in deeper waters. Boris Johnson’s nomination of the Russian businessman Lord Evgeny Lebedev for a peerage should be referred to the cross-party intelligence committee, Sir Keir Starmer, Labour party leader has said. The UK is reportedly losing its position as the favoured destination for high spending international tourists to the EU after the government abolished tax-free shopping at the start of last year. Ministers are resisting Labour party calls to force anonymous foreign owners of UK land and property to reveal their identities within 28 days, warning that “decent law-abiding citizens” could be caught up in a crackdown on oligarchs linked to the Kremlin.

EUR

Euro is weaker than most major currencies in the early morning trade. Russia’s military will hold fire and open humanitarian corridors in several Ukrainian cities on Monday, the Defence Ministry said, after fighting halted weekend evacuation efforts and civilian casualties from Russia’s invasion mounted. Russian state natural gas company Gazprom is continuing to supply gas via Ukraine at the same volume as a day earlier of 109.5 million cubic metres per day, Russia’s Prime news agency reported on Monday. The UN’s high commissioner for refugees has warned that the flood of people escaping Ukraine in the wake of Russia’s invasion has become the fastest growing refugee crisis in Europe since the second world war. Meanwhile, Italian police have seized villas and yachts worth 143 million euros ($156 million) from five high-profile Russians who were placed on sanctions lists following Moscow’s attack on Ukraine.

USD

The dollar is well bid against most major currencies overnight. US gasoline prices at the pump jumped 11% over the past week to the highest since late July 2008 as global sanctions cripple Russia’s ability to export crude oil after its invasion of Ukraine. Automobile club AAA said that the average US regular grade gasoline prices hit $4.009 per gallon on Sunday, up 11% from $3.604 a week ago and up 45% from $2.760 a year ago. Hundreds of trucks, recreational vehicles and cars circled the outskirts of Washington on Sunday, aiming to slow traffic around the capital as part of a protest against pandemic restrictions. The US is scrambling for alternatives as it seeks to curb Russian supply and put a lid on rocketing prices. The head of the US’s biggest shale oil operator, Pioneer Natural Resources, said the country would be unable to replace crude supplies from Russia this year, even as he backed calls for a global embargo on its energy exports.

Markets

Stocks slid Monday along with European and US equity futures amid fears of an inflation shock in the world economy as crude oil soared on the prospect of a ban on Russian supplies. S&P 500 and Nasdaq 100 contracts fell over 1% and European futures some 2.7%. An Asian share index was on course for a bear market, a drop of more than 20% from a February 2021 peak. Brent crude was up about 10% after briefly touching $139 a barrel. Secretary of State Antony Blinken said Sunday the US and its allies are looking at a coordinated embargo following Russia’s invasion of Ukraine. The euro sank on concerns about the economic outlook for Europe, which relies on Russian energy. The global economy was already struggling with high inflation due to pandemic-era effects. The Federal Reserve and other key central banks now face the tricky task of tightening monetary policy to contain the cost of living without upending economic expansion or roiling risky assets.

Main Economic Data/Central Banks/Government (All Times CET)

7:25 a.m.: SNB publishes annual results
7:45 a.m.: Switzerland Feb. unemployment rate
8:00 a.m.: Germany Jan. retail sales, factory orders
8:00 a.m.: Norway Jan. industrial production
9:00 a.m.: Austria Feb. wholesale price index
9:00 a.m.: Switzerland Feb. foreign currency reserves
10:30 a.m.: Eurozone March Sentix investor confidence
4:00 p.m.: BOE’s Cunliffe speaks
Bank of Italy Report on Balance-Sheet Aggregates

Corporate Events

Earnings include Surgutneftegas, Belimo

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