MARKET WRAPS
Watch For:
Chicago Fed National Activity Index for February; Nike results.
Opening Call:
Stock futures edged lower and oil prices rose after major indexes notched their strongest week since November 2020.
Ukrainian officials rejected a Russian demand that their forces in Mariupol surrender as the U.K. Ministry of Defense said that heavy fighting continues north of Kyiv.
The White House said President Joe Biden will hold a call with President Emmanuel Macron of France, Chancellor Olaf Scholz of Germany, Prime Minister Mario Draghi of Italy, and Prime Minister Boris Johnson of the United Kingdom to discuss events, and later meet chief executives.
"This is the main driver of markets in the coming days and maybe even weeks-it is about everything that comes out of the Ukraine conflict," said Carsten Brzeski, ING Groep's global head of macro research.
Mr. Brzeski said he is awaiting surveys of purchasing managers at businesses in the U.S. and Europe, due Thursday, for an initial assessment of how the war is beginning to hit economies.
The pan-continental Stoxx Europe 600 was flat. Russia's stock market remains closed. Russia's central bank will purchase government bonds when trading resumes Monday, Gov. Elvira Nabiullina said. She said the Moscow Exchange, which has been closed since Feb. 25, would reopen gradually but provided no details beyond the bond buying.
Boeing shares slumped in premarket action after China state media reported that a 737 jet crashed.
Stocks to Watch:
Anaplan, a provider of business-planning software, agreed to be acquired by private-equity firm Thoma Bravo for $66 a share, or $10.7 billion.
The offer is a premium of about 46% to the volume weighted average price of Anaplan stock for the five days ended March 18, the companies said in a press release.
Shares of Anaplan were jumping almost 27% to $64.21 in premarket trading Monday. The stock closed Friday at $50.59. Prior to Monday, the shares have risen 10.3% year to date but have fallen nearly 7% over the past one year.
The deal is expected to close in the first half of 2022. Anaplan will become a privately held company once the deal closes.
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Warren Buffett's Berkshire Hathaway agreed to buy Alleghany shares for $848.02 a share in cash, or a total equity value of about $11.6 billion.
The deal represents a 29% premium to Alleghany's average stock price over the last 30 days, the companies said in a statement.
Shares of Alleghany, the property-and-casualty reinsurance company, closed Friday at $676.75.
Forex:
The dollar should rise this week, supported by stronger U.S. economic growth compared to other countries affected by the Russia-Ukraine conflict and the Federal Reserve's decision Wednesday to start raising interest rates, ING said.
The dollar is likely to find some support against low-yielding currencies and the bloc of European currencies in the near term, while other economically-sensitive currencies, like the outperforming Australian and New Zealand dollars, should remain in demand, ING analysts said.
The DXY dollar index could rise back to 99.00 by the end of the week, they said.
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EUR/USD could undergo a short-term recovery, based on technical charts, CMC Markets said. Its upside momentum remains constructive, as the four-hour relative-strength-index oscillator has continued to hover above key support at the 41% level.
Also, EUR/USD formed a weekly bullish "Morning Star" candlestick pattern last week that indicates a shift in sentiment to positive from negative, which in turn may start at least a potential tactical rebound in coming weeks, CMC Markets said, pegging intermediate resistance at 1.1120 and key medium-term pivotal support at 1.0900.
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Sterling might struggle to recover versus the dollar after the Bank of England's cautious tone at Thursday's meeting, ING said. The scaling back of the market's U.K. interest rate rise expectations after the BOE's meeting means GBP/USD is unlikely to rise above 1.32-1.33, ING analysts said.
"At the same time, the euro's greater exposure to lingering uncertainty in Ukraine could still favor a EUR/GBP decline to the 0.8300 mark in the near term."
The BOE raised its benchmark interest rate 25 basis points to 0.75% on Thursday but was more cautious about the prospect of further rises compared to the Fed at its meeting on Wednesday.
Bonds:
In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 2.192% from 2.146% Friday.
Capital Economics raises its forecast for the 10-year U.S. Treasury yield for 2022 and 2023, attributing the upgrade to the war in Ukraine and a more hawkish Federal Reserve, its economists said.
"While in the near term the outlook for financial markets will depend on the evolution of the war, which is hard to predict, we think that the changes to the macroeconomic backdrop...warrant four broad revisions to our market forecasts," they said.
CE raises its end-2022 and end-2023 forecasts for the yield of 10-year Treasurys to 2.5% and 3.0%, respectively, up from 2.25% and 2.75% previously.
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Morgan Stanley forecasts a few near-term tailwinds for 10-year German Bund yields, leading to a stabilization, its rates strategists said. They point to a very cheap valuation, oversold technical conditions, and a more supportive net supply net of QE.
This could lead to a prolonged stay of 10-year Bund yields in the 0.25% to 0.40% range before a resumption of the bear market--a rise in yields, they say.
Commodities:
Oil rose after talks between Ukraine and Russia show little signs of progress. Financial markets are still largely determining oil prices by assessing the likelihood of a diplomatic solution to the Ukraine conflict, CBA said.
"Physical shortages, linked to current sanctions on Russia, though will eventually play a more dominant role in oil price determination," CBA said.
Meanwhile, the market is also keeping an eye on the fresh wave of Covid-19 outbreaks in China, which has resulted in some of the heaviest virus-related restrictions since early 2020, ANZ said.
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Gold was slightly lower in European trade. Gold futures had settled lower Friday following a decision by the Fed last week to raise benchmark interest rates for the first time since 2018.
Focus will likely be on any progress in the talks between Russia and Ukraine, Commerzbank says. "For a time, hopes that the peace talks between representatives of Russia and Ukraine could lead to an end to the war had weighed on its price," it said.
TODAY'S TOP HEADLINES
Boeing 737 Carrying More Than 130 People Crashes in Southern China
BEIJING-A Boeing 737 passenger plane operated by China Eastern Airlines Corp. carrying more than 130 people crashed in southern China, the country's state media reported.
The plane crashed in the southern province of Guangxi on Monday, state media including Xinhua News Agency reported. There were no immediate reports on the number of casualties, and rescue teams have been sent to the area, the reports said.
Nielsen Rejects Roughly $9 Billion Takeover Offer From Private-Equity Consortium
Nielsen Holdings PLC rejected a roughly $9 billion takeover offer from a private-equity consortium, saying that it undervalues the TV-ratings company.
The Wall Street Journal reported last week that Elliott Management Corp. was part of a private-equity group in advanced talks to buy Nielsen for roughly $15 billion including debt. Nielsen said Sunday it wouldn't proceed with a bid that would have valued the company at $25.40 a share, without naming members of the consortium.
Thoma Bravo to Buy Anaplan for $10.7 Billion
Private-equity firm Thoma Bravo LP has struck a deal to buy Anaplan Inc. for $10.7 billion, the latest in a recent string of big leveraged buyouts.
Under the terms of the deal, which was reported earlier by The Wall Street Journal, Anaplan shareholders are to receive $66 a share in cash, the company said. Anaplan Chief Executive Frank Calderoni plans to continue to lead the company.
Aramco Profit Hits $110 Billion as Saudis Seek to Expand Investments
DUBAI-State oil giant Saudi Aramco said Sunday its 2021 net profit more than doubled to $110 billion, a boon to the Middle East's largest economy as it seeks to use its hefty profits for investment opportunities domestically and abroad.
The world's largest oil exporter is benefiting from rapidly rising oil prices and said it raised its spending target this year as demand surges and the impacts from the pandemic recede. Brent crude, the global oil benchmark, surged to an average of $70.86 a barrel last year after falling to an average of $41.96 a year earlier. It settled Friday at $107.93 a barrel, down 4.2% for the week. Early this month, oil at times traded above $130 a barrel.
China Huarong Asset Management Swung to Profit in 2021
China Huarong Asset Management Co. swung to a profit in 2021, a year after the country's biggest buyer of bad loans announced multibillion-dollar losses.
The Beijing-based company, which is majority owned by China's Finance Ministry, said Monday that it expects to post a net profit of 370 million yuan ($58.36 million) supported by accelerated cash recovery and a faster turnover of its M&A business.
Canadian Pacific Railway Work Stoppage Threatens New Supply-Chain Snarl
Canadian Pacific Railway Ltd. trains were halted Sunday morning, stalling global shipments of key manufactured goods and commodities such as fertilizers, after an impasse in contract negotiations between the company and its conductors and engineers.
Canadian Pacific and the Teamsters Canada Rail Conference, which represents more than 3,000 conductors, engineers and yard workers at the railway, disagreed over what triggered the breakdown in talks. The railway has been in negotiations and mediation since September with the union, which seeks increased wage and pension benefits and more rest times.
(MORE TO FOLLOW) Dow Jones Newswires
03-21-22 0611ET
