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Equities
North American markets sank at Thursday’s open as Russia’s invasion of Ukraine sent shockwaves through global markets.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 339.78 points, or 1.64 per cent, at 20,404.39.
In the U.S., the Dow Jones Industrial Average fell 301.43 points, or 0.91 per cent, at the open to 32,830.33.
The S&P 500 opened lower by 69.73 points, or 1.65 per cent, at 4,155.77, while the Nasdaq Composite dropped 449.61 points, or 3.45 per cent, to 12,587.88 at the opening bell. The Nasdaq dropped more than 20 per cent from its record closing high in November last year and on track to confirm a bear market.
Early Thursday, explosions could be heard Wednesday in Kyiv, Odessa and several other Ukrainian cities as Russian President Vladimir Putin declared the start of a “special military operation” against Ukraine, the scope of which wasn’t immediately clear, The Globe reports. Several loud explosions could be heard in the directions of Kyiv’s Boryspil airport, shortly after Ukraine announced the closure of its airspace. Blasts were also reported in the eastern Ukrainian cities of Kharkiv and Mariupol.
“It’s panic in the markets,” Swissquote senior analyst Ipek Ozkardeskaya said in an early note.
“At this point, it’s impossible to bet on any scenario,” she said. “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.”
Investors will be watching for the announcement of harsher sanctions. President Joe Biden said the U.S. and its allies “will be imposing severe sanctions on Russia” after speaking with Ukrainian President Volodymyr Zelensky early Thursday after Moscow’s “unprovoked and unjustified attack” on Ukraine. In a statement, Mr. Biden said Mr. Zelensky called him following the start of Russian attacks and that Mr. Biden “condemned this unprovoked and unjustified attack.”
In corporate news, Royal Bank kicks off earning season for Canada’s biggest lenders RBC posted a 6% jump in first-quarter profit on Thursday, driven by higher fee income in its banking and wealth management units. Canada’s biggest lender by market capitalization reported overall net income of $4.1-billion, or $2.84 a share, from $3.8-billion, or $2.66 share, a year ago. Adjusted to exclude certain items, RBC said it earned $2.87 per share, ahead of average estimate of $2.71 per share among analysts, according to Refinitiv.
Meanwhile, grocery giant Loblaw Cos Ltd beat market estimates for quarterly revenue in the latest quarter. Total revenue fell to $12.76-billion in the fourth quarter ended Jan. 1 from $13.29-billion a year earlier. Analysts had expected $12.64-billion, according to IBES data from Refinitiv.
Overseas, the pan-European STOXX 600 was down 4 per cent by midday. Britain’s FTSE 100 fell 3.17 per cent. Germany’s DAX and France’s CAC 40 were down 5.12 per cent and 5.02 per cent, respectively.
In Asia, Japan’s Nikkei fell 1.81 per cent. Hong Kong’s Hang Seng dropped 3.21 per cent.
Commodities
Crude prices spiked, with Brent topping US$100 a barrel, in the wake of military action by Russia in Ukraine.
The day range on Brent is US$94.73 to US$100.83. The range on West Texas Intermediate is US$92.50 to US$100.54. Both benchmarks were up by more than 6 per cent by early Thursday morning and Brent had breached the US$105 mark for the first time since 2014.
“Overall, the price action is quite orderly, suggesting the market was positioned for this event,” OANDA senior analyst Jeffrey Halley said in an early note.
“However, I believe this will not remain the case, particularly once the scale of the sanction response from the U.S. and Europe, and the situation on the ground in the Ukraine become clear.”
At this point, he said, a move by Brent above US$120 a barrel is “not out of the question”.
Sanctions announced early this week didn’t target energy trade, but analysts say supply concerns are now driving prices. Russia is the world’s second biggest crude producer.
“It’s not just geopolitical risk that is the problem but the further straining of supply,” OCBC economist Howie Lee said.
“Russian oil supply will disappear overnight if faced with sanctions... and OPEC can’t produce fast enough to cover this gaping hole.”
In other commodities, gold prices jumped more than 2 per cent, hitting their highest in over a year as world events pushed investors to safer holdings.
Spot gold climbed 1.8% to US$1,941.50 per ounce by, after hitting the highest since January 2021 at US$1,948.77. U.S. gold futures jumped 1.7% to US$1,943.20.
Currencies
The Canadian dollar fell while safe-haven currencies spiked and the Russian rouble hit a record low.
The day range on the loonie is 77.98 US cents to 78.59 US cents. The loonie was last at the low end of that spread.
Reuters reports that volatility across foreign exchange markets soared, with one commonly followed measure hitting its highest since December 2020.
The U.S. dollar index initially rose as much as 0.60 per cent to 96.762 for the first time since Jan. 31, before it gave up some of those gains.
The Swiss franc hit its highest since 2015 versus the euro at 1.029 before falling back. The euro was last down 0.3 per cent at 1.0352 francs. Japan’s yen was up 0.2 per cent at 114.74 per U.S. dollar.
The rouble weakened to as low as 89.98 per U.S. dollar.
In bonds, the yield on the U.S. 10-year note was lower in the predawn period at 1.872 per cent.
More company news
Maple Leaf Foods Inc. reported its fourth-quarter profit fell compared with a year ago as it faced rising labour and production costs. The company says it earned $1.9-million or two cents per share for the quarter ended Dec. 31, compared with a profit of $25.4-million or 20 cents per share in the last three months of 2020. Sales totalled $1.12-billion, down from $1.13-billion in the fourth quarter of 2020, which included an extra week. On an adjusted basis, Maple Leaf says it earned nine cents per share for the quarter, down from an adjusted profit of 31 cents per share a year earlier.
Teck Resources Ltd. reported a fourth-quarter profit attributable to shareholders of nearly $1.49-billion compared with a loss of $464 million a year earlier, helped by strong commodity prices. The miner says the profit amounted to $2.74 per diluted share for the quarter ended Dec. 31, compared with a loss of 87 cents per diluted share in the last three months of 2020. On an adjusted basis, Teck says it earned $2.54 per diluted share in the fourth quarter of 2021, compared with an adjusted profit of 46 cents per diluted share in the fourth quarter of 2020. Analysts on average had expected an adjusted profit of $2.38 per share and $4.44 billion in revenue, according to financial markets data firm Refinitiv.
China’s Alibaba Group Holding Ltd reported its slowest-ever increase in quarterly revenue since going public in 2014, as tepid growth in core e-commerce business and intensifying competition ate into its sales. Revenue rose about 10% to 242.6 billion yuan (US$38.37-billion) in the third quarter. Analysts on an average had expected revenue of 246.37 billion yuan, according to Refinitiv data.
Economic news
(8:30 a.m. ET) Canadian manufacturing sales.
(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 19.
(8:30 a.m. ET) U.S. real GDP for Q4.
(10 a.m. ET) U.S. new home sales for January.
With Reuters and The Canadian Press