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Nickel Goes Wild, Oil Still Above $120, EU’s Big Plans – What’s Moving Markets

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By Geoffrey Smith — Nickel prices go crazy as stress builds in the world’s commodity markets. The European Union will publish new ideas on how to wean itself off Russian energy, a prospect that sent the ruble down another 4% to a new record low. U.S. stocks are seen posting a dead-cat bounce after Monday’s carnage, while the Treasury will sell 3-year notes into a weakening market.  Estee Lauder (NYSE:EL), Adidas (OTC:ADDYY) and Adobe (NASDAQ:ADBE) join the exodus from Russia. Oil stays well bid as Shell (LON:RDSa) self-sanctions but gas prices ease off after Germany plays down a Russian threat to stop current supplies. Apple (NASDAQ:AAPL) is expected to show new cut-price iPhone. Here’s what you need to know in financial markets on Tuesday, 8th March. 

1. Nickel goes crazy

The stress in global financial markets as a result of Russia’s war in Ukraine is becoming ever more obvious.

The London Metals Exchange was forced to suspend trading in Nickel and took the rare step of saying it may adjust or cancel some trades retroactively after a violent short squeeze took the main contract to over $101,000 a ton. That’s about seven times where it was trading before the pandemic and more than twice its previous peak, hit in 2007.

The sharpness of the move appears to have been caused by an industrial client of China Construction Bank (OTC:CICHF), which needed to be given extra time to meet its margin calls on Monday.

Nickel is mainly used by the auto and construction sectors for stainless steel but demand has mushroomed in recent years due to its use as a battery metal in electric vehicles. The average Tesla (NASDAQ:TSLA) model uses 45 kilograms of the metal.

2. Oil stays bid as Shell self-sanctionsr; natural gas prices ease  in Europe; STEO, API eyed

Crude oil prices stayed above $120 a barrel as Shell confirmed it would no longer buy Russian oil or gas through either spot or long-term markets. That reinforces the ‘self-sanctioning’ dynamic visible in the market for the last two weeks.

By 6:10 AM ET, U.S. crude futures were up 2.7% at $122.61 a barrel, while Brent futures were up 2.9% at $126.76 a barrel.

Benchmark European natural gas futures, however, eased off after German Economy Minister Robert Habeck said he didn’t expect Russia to follow through on a threat to stop gas supplies to Europe through existing pipelines.  

The extreme level of prices will add spice to the U.S. government’s Short-Term Energy Outlook, which is released at 12 PM ET (1700 GMT). The American Petroleum Institute’s weekly inventory report, meanwhile, is due at 4:30 PM ET, as usual, and market participants will be sensitive to any further signs of high prices causing demand destruction. National average gasoline prices hit a record high of $4.17 a gallon on Monday.

3. Stocks set to open with unimpressive bounce; Adidas, Estee Lauder, Adobe join the Russian exodus

U.S. stocks are set to open with a modest rebound later, after another day of heavy losses caused by the war in Ukraine and the Western measures to punish Russia for it.

By 6:15 AM ET, Dow Jones futures were up 75 points, or 0.2%, while S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.1%. The three main cash indices had lost between 2.3% and 3.6% on Monday, with the Dow becoming the latest benchmark index to enter correction territory.

At 1 PM ET, the U.S. Treasury will auction three-year notes in the first of three big debt sales this week. Yields hit their highest in two weeks on Monday as initial flight-to-quality flows faded under pressure from ongoing fears about inflation.

Stocks in focus later are likely to include Estee Lauder (NYSE:EL), Adidas (DE:ADSGN) and Adobe (NASDAQ:ADBE), the latest big names to join the exodus from Russia.

4. EU to get serious about cutting energy dependence? 

European bonds and central European currencies rallied after a Bloomberg report saying that the European Union will consider issuing joint debt to finance spending deemed necessary to strengthen Europe’s defenses and wean itself off Russian energy supplies.

The move would be a further radical step towards a common fiscal capacity for the EU, adding to the Next Generation EU debt that was launched to finance the rebuilding of the economy after the pandemic.

The Polish zloty, Hungarian forint and koruna, all of which have underperformed sharply in the last two weeks, bounced strongly.   

The European Commission is due later to issue a new strategy document detailing how it intends to cut the EU’s dependence on Russian gas, fresh evidence of the profound change in strategic thinking caused the invasion of Ukraine. The ruble, meanwhile, fell another 4% against the dollar to a new record low.

5. Apple expected to show new cut-price iPhone

Apple is widely expected to preview a new cut-price version of its iPhone at a corporate event on the West Coast later.

The move appears to suggest a greater degree of price sensitivity at the company for its flagship product than was evident in the last two years, when it took advantage of record high demand for hardware upgrades to raise prices substantially for its new models.

Nickel Goes Wild, Oil Still Above $120, EU’s Big Plans – What’s Moving Markets

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