The week starts with a 10% rally in US crude prices after the US Secretary of state Blinken said that the US and its allies now consider an embargo on the Russian oil.

The market mood is red, again, this Monday. Cutting off the Russian oil will increase the positive pressure on oil prices and will likely send the price of a barrel above $150 in the foreseeable future. The extended rally in oil and commodity prices will likely bring the European economies to ration consumption and weigh on the economic recovery and the corporate earnings in 2022.

Activity in European futures are severely down at the open. US equities are also poised to open in the red.

Bitcoin slipped below the $40K mark during the weekend, the US dollar index prepares an advance to the 100 mark, the euro-franc fell below the 1 mark for the first time since 2015 and gold hit $2000 an ounce.

Risk appetite remains limited as the war in Ukraine intensifies. The price of US crude eased below the $110 per barrel yesterday then jump back above $114, on reports that smoke was visible from a nuclear power plant in Ukraine

The market mood is deep red. The European stocks continue feeling the pinch of an escalating war, as the US major indices remain under a decent selling pressure, with the fading optimism about Jerome Powell’s announcement that he would back a 25bp hike in March meeting.

US dollar, gold and commodities remain in demand. Commodities had their best week since 1974.

However, if the things get bad enough to push investors to close their positions, then the US dollar would be, by far, the best hedge.

Bitcoin, on the other hand, is giving back the early week gains as it becomes clearer by the day that it won’t be a hassle-free safe haven to investors, as the Western forces are going after the coin to impose strict regulations to prevent Russians from going around the sanctions that are imposed to them.

The US NFP data is due today, but the number matters little unless there is a big negative surprise. What really matters is the average hourly earnings which is expected to have risen to 5.8% year-on-year, and which would mean a higher and a sustainable pressure on inflation.

The possibility of another round of discussion between Russia and Ukraine and Jerome Powell’s more dovish than expected testimony saved the day for equity investors yesterday.

The S&P500 rallied 1.86%, while Nasdaq gained 1.62% on Wednesday, but the 50-DMA finally crossed below the 200-DMA confirming a long-awaited death cross formation on Nasdaq’s daily chart.

Elsewhere, according to S&P Global Market Intelligence, the short interest against the energy stocks has peaked to the highest levels in more than a year, as the latest rally in global energy stocks ‘may be petering out, even with oil prices surging to their highest levels since 2014’.

But US and Brent crude continue their jaw-dropping advance this morning as OPEC+ decided to maintain its production target unchanged at 400’000 extra barrels per day from April.

Among safe havens, demand in US dollar remains strong. Gold performs well, but Bitcoin becomes a risky safe haven as the latest news suggests that the US Department of Justice announced a new task force broadly designed to enforce sanctions, which will also target efforts to use cryptocurrency to evade US sanctions.

The barrel of US crude jumped more than 11.5% yesterday and soared another 2% to $111 mark this morning, as the cruelty of the Ukrainian war pushes the US to ban the purchase of Russian oil. OPEC meets today and its decision is critical for the foreseeable future of the oil markets. So far, the cartel confirmed that they remain committed to the OPEC+ deal with Russia, and they are not expected to change their production boost plans despite the Ukrainian war.

But more sanctions are coming in from the governments and companies. Exxon Mobil has finally announced to shut down production in Russia, Total Energies said it won’t invest in new projects, while Apple and Nike halted sales in Russia.

The war is now expected to soften the central bank expectations despite soaring inflation. Jerome Powell will testify before the Congress today, and Bullard will talk at an online event.

ADP report is due today, but the data will hardly have a material impact on the overall risk appetite as the Ukrainian war remains on top of investors’ priorities these days, even though a typical Western portfolio has limited exposure to Russia.

Yesterday’s talks in Belarus between the Ukrainian and Russian committees were overshadowed by the intensifying military fight in Ukraine. Putin, who seems frustrated with the Ukrainian resistance, and the Westerns sanctions imposed sanctions to the West on his turn by closing its airspace to 36 countries and banning its residents from transferring hard currency abroad.

The direct implication of Russin sanctions was a surge in cryptocurrency prices, and especially Bitcoin.

Ruble lost more than 30% on Monday and the Russian central bank more than doubled its bank rate to 20% to stop the bleeding. The Russian stock exchange on the other hand remains closed to avoid a bloodbath.

BP shares dived near 7% on decision to get rid of 20% stake in Russian Rosneft but are better bid this morning as Shell announced that it will end its alliance with Gazprom, turning all eyes to other oil giants like TotalEnergies and Exxon, which haven’t yet disclosed what they will do.

Switzerland, on the other hand, took a major step in its history of neutrality and decided to adopt the full range of Western sanctions imposed on Russia.

The commodity trading in Geneva remained mostly intact as the industry has not yet been sanctioned by Europe.

The barrel of US crude hit $100 then eased as the US said to consider using 30 million barrels from the Strategic Petroleum Reserve, with an equivalent amount from a group of other countries.

The fuel pressure has apparently gotten too much for Germany which announced yesterday that it aims for 100% energy from renewable sources by 2035.

Renewable energy stocks took a ride as investors increased their bet of an accelerating green transition.

The US futures are flat this morning, and we are now counting down to the death cross formation in Nasdaq, which, along with the tighter Fed expectations and the war pressure may not extend gains sustainably.

The week kicks off with soaring energy prices and a decent selling pressure on European and American index futures as the Russian invasion in Ukraine and the bigger sanctions imposed on Russia take a severe toll on market sentiment.

The barrel of US crude jumped more than 5% to $100 this morning, whereas the European natural gas futures closed last Friday 50% higher.

The British BP has given the most drastic response among the Western companies to the Russian invasion by selling near 20% stake in the Russian oil giant Rosneft. BP gapped lower at the open. It’s business versus ethics.

In the FX, the US dollar is set for another strong session, gold trades a touch above the $1900, as Bitcoin fails to clear the $40K resistance.

The US index futures kicked off the week in the negative. Any hopeful news could change the negative sentiment within minutes and send the international stock markets rallying. But the chance of seeing a diplomatic progress is rather slim.

Markets are trading with increased volatility and the price moves become unpredictable. Risks remain tilted to the downside, and price rallies may remain short-lived.

Oil rallied past the $100 yesterday, then eased to $96 per barrel, US equities opened deep in the red but closed the session with strong gains.

The direct impact of the Ukrainian crisis to US equities could be limited, but the indirect impact, which is the rising energy prices could take a severe toll. This is why the war’s biggest threat to the American companies is inflation.

The barrel of US crude traded above the $100 mark yesterday then eased back to around $96 as Joe Biden said the US will release its strategic oil reserves to ease the pressure at the pump. Also, there is increased possibility of a nuclear deal with Iran to unlock the Iranian oil potential - which would provide up to 800’000 barrels of additional supply per day.

Bitcoin on the other hand gained on rumours that big Russian money could flow into the coin to avoid the US sanctions. Could it be? What would be the risks and implications of such a migration?

Here is the link to the Bloomberg article: https://www.bloomberg.com/news/articles/2022-02-24/russia-billionaires-could-use-crypto-to-go-around-severe-us-sanctions

Russia launched a full-scale invasion of Ukraine; air raid sirens are sounding in the capital Kyiv and Zelensky calls for martial law in national address.

It’s panic in the markets panic. The S&P500 futures are down by almost 2%, the Nasdaq futures slipped 2.5% and the DAX and Eurostoxx futures lost near 4% this morning. FTSE futures are down more than 2%, but the British blue-chip index should outperform its European and American peers due to its high commodity exposure.

In commodities, the European natural gas futures are already up 10%. Brent crude spiked above the $101 per barrel this morning, as US crude jumped past the $98 mark. Gold flirts with the $1950 per ounce and the bulls are already to target a further advance toward the $2000 threshold. Bitcoin is under a decent selling pressure, as well.

Corn futures are up more than 4%, wheat futures are up more than 5%, as Russia is the world’s largest grain wheat exporter. Oat futures, soybean futures, silver, platinum, palladium, all move higher this morning expect for sugar, cotton, orange juice and live cattle.

At this point, it’s impossible to bet on any scenario. We can only monitor closely the latest developments and stand ready for more volatility. The VIX index is around the 30 level and should spike higher within the next couple of hours.

The combined revenue exposure of the S&P500 to Russia and Ukraine is only about 1%. It’s not much. Yet, the rising energy and commodity prices are a growing threat for the US equities as they will put a further upside pressure on inflation and force the Federal Reserve’s (Fed) hand to act more aggressively to tame the inflation.

In the FX, the US dollar index is trending higher this morning and the US dollar is certainly a ‘safe’ tactical currency play as the Ukrainian tensions escalate.

S&P500 at correction zone & Nasdaq heads to death cross | MarketTalk: What’s up today? | Swissquote

Market focus remains on Ukraine and Russia, as the US warns that Russia moving its army to the separatist regions in Donbas could mean a larger-scale invasion in the coming days. Russia is suffering from a first round of sanctions. The Nord Stream Pipeline project, which has been one of Putin’s priorities, has been put to coma, and Britain announced some sanctions targeting the banks. Lavrov and Blinken will no longer meet on Thursday.

More sanctions are expected in the coming days, but the measures that have been announced so far are not as heavy as feared.

Market mood is not cheerful, but the softer-than-feared sanctions somewhat help lifting the mood. The risk appetite is limited, but capital leaves safe haven assets as gold and Japanese yen.

Bitcoin is back above the $38K mark, but gains could be fragile as a further rise in geopolitical tensions could pull the price all the way down to the $30K level.

The S&P500 stepped into the correction territory after losing 1% at yesterday’s session, as Nasdaq fell to the lowest level since the beginning of the year. Although an improved sentiment regarding the Ukrainian tensions could lead to short term recovery, the US equity selloff is not only due to the Russian tensions. Most of the decline is explained by a quick hawkish shift in the Fed expectations and the prospects of tighter monetary policy remain in play.

Elsewhere, the Reserve Bank of New Zealand hiked its official cash rate by 25 basis points to 1% a today’s meeting and Volkswagen said it’s planning an IPO for Porsche.

Macy’s and Home Depot fell after announcing their fourth quarter results, as inflation took a toll on profits, as Europe will confirm that inflation hit 5.1% in January.

All hell broke loose yesterday, as the Russian President Putin said on a TV address that he recognizes the Ukraine’s two separatist regions Donetsk and Luhansk as republics. The latest statement also hints to the end of the Minsk agreement and clearly heightens the risk of a Russian invasion in Ukraine in the coming days.

Market reaction: equities are under a decent selling pressure, Bitcoin extends losses, natural gas, oil and gold rally, safe haven currencies are up. Expect high volatility in the coming sessions.

Elsewhere, Alibaba nosedived on fresh news that authorities asked the Chinese banks to check their exposure to Ant Group, which could further damage the company’s ties with other financial institutions for its online-loan business. Other Chinese tech stocks are also feeling the threat of further government crackdown.