FX.co ★ US stock market on March 1, 2022

S&P500

Markets calm down after initial shocks from Russia's special operation in Ukraine.

The main US indices declined moderately on Monday. The Dow dropped by 0.5%, the NASDAQ added 0.4%, the S&P500 was up by 0.2%.

The US market fell heavily at the opening on Monday, but then rallied for the rest of trading and almost made up for the morning's fall.

When it comes to Asian markets, Japan's stock indices are trading 1.5% higher, China's indices added 0.2%.

The US said yesterday it is ready to sell up to 70m barrels of oil from reserves if a military conflict between Russia and Ukraine triggers a new rise in oil prices.

The main event remains the military conflict between Russia and Ukraine. Yesterday the whole world was hoping for at least a ceasefire after direct talks between Russia and Ukraine began on the territory of Belarus. However, the hours-long talks did not really change anything. The sides agreed to hold a new round in two days. On Tuesday morning, it was reported that Russian troops had surrounded Kherson and an assault was likely to be launched. American media reported that the Kremlin's alleged plan is to surround Kiev and force Ukraine to capitulate.

The West has imposed harsh sanctions. The assets of the Central Bank of Russia have been blocked. A number of major Russian banks, such as VTB, are cut off from the SWIFT settlement system. Personal sanctions are imposed on Russian billionaires Sechin, Rotenberg, Mordashev, Tokarev, Usmanov, Aven, Friedman, etc. The Russian market has come under tremendous pressure. The Central Bank of Russia raised the ruble rate to a whopping 20% per annum yesterday. Loans have become unaffordable for most Russians because of their huge rate. The dollar and euro rose sharply to 94 and 106 roubles as of Tuesday morning. The Russian Central Bank cancelled trading on the Russian market on Monday. It became known this morning that the Central Bank had also cancelled trading on the stock market for March 1.

China: The February manufacturing activity indices came out better than forecast, slightly above 50%, meaning that the US economy returned to growth in February.

The S&P500 is at 4,374, staying in the 4,340–4,400 range.

The Midwest Business Activity Index (Chicago) fell sharply from 65% to 56% in February. This is a possible signal of a slowing US economy. The US trade deficit remains at around $100bn per month. Retail inventories rose by 1.9% in January up from 4.7% the month before.

The ISM Industrial Average for February is expected to be released today. It is expected to be at 58%, up from the previous 57.6%.

USDX is at 96.80, trading in the 96.50–97.10 range. The dollar has been in a range for the past few days. The situation in Ukraine does not allow investors to see the outlook.

USD/CAD is trading at 1.2670 in the 1.2600–1.2750 range. The rise in oil prices has turned the pair down and the fall could continue with a break below 1.2600.

The US market is set to start a new wave of growth. However, a further escalation of the situation in Ukraine could again derail growth and cause a new market collapse.