Russian Nuke Drills, ECB Hawks, Deere Earnings

© By Geoffrey Smith — The US and Russia will meet again next week to discuss Ukraine, but not before Russia conducts some nuclear and missile exercises later this weekend. Shares will see a weak rebound from Thursday’s sell-off, ahead of Deere (NYSE:) earnings and DuPont (NYSE:)’s latest corporate restructuring exercise. The ECB’s hawks continue to find their voices, and UK retail sales also point to another rate hike coming soon. Crude oil prices, meanwhile, are falling on reports of progress in negotiations to lift sanctions against Iran. Here’s what you need to know in the financial markets on Friday, February 18. 1. Russian saber chatter gets louder Russia will hold exercises on Saturday to test the readiness of its nuclear and ballistic missiles, in the latest extravagant show of military strength. The exercises, which the Kremlin says have long been planned, will involve its armed forces in the Southern Military District (opposite Ukraine) and its Black Sea fleet. They come at a time when the US is still warning that a Russian invasion of neighboring Ukraine is imminent. Russia says it has no plans to invade, but warned in a document published Thursday by the foreign ministry against possible military action if NATO does not comply with its demand that Ukraine should never join the alliance. US Secretary of State Anthony Blinken will meet his Russian counterpart Sergey Lavrov again next Thursday for talks to resolve the crisis, the State Department said late Thursday. 2. Celanese in $11 Billion Deal for DuPont Assets Celanese (NYSE:) goes to $11 billion, the latest realignment of DuPont’s portfolio as it focuses on electronics, autos and water. DuPont has already spun off its food and life sciences unit and has agreed to sell other companies, including. It has also been an active buyer, agreeing to buy Laird Performance Materials for $2.3 billion and engineering materials manufacturer Rogers (NYSE:) for $5.2 billion. The deal is expected to close around the end of 2022. 3. Stocks will open higher ahead of a last-ditch Eastern Europe resolution, as well as some worryingly weak guidance from companies making their quarterly reports. At 6:15 a.m. ET, they were up 104 points, or 0.3%, while they were up 0.4% and 0.7%/. In all three cases, that is less than a quarter of what was lost on Thursday. Earnings season has now more or less come to an end, but has been marked by regular and violent reactions to companies that either missed consensus forecasts or warned of slowing growth in the coming months. The trend has not only hit “profitless tech” but also market enthusiasts such as Meta Platforms (NASDAQ:) and, on Thursday, chipmaker Nvidia (NASDAQ:). Deere, Cerner (NASDAQ:) and Campbell Soup (NYSE:) later report their profits. 4. Europe’s interest rate path picks up The trajectory for interest rates in Europe bounced overnight, with another European Central Bank policymaker – the Slovak Peter Kazimir – calling for an end to asset purchases from the European Central Bank. bank in August to give itself ‘flexibility’ for interest rates after rate hikes. Today, the ECB is still – pretty much – clinging to the idea that it will not have to raise interest rates this year. However, an increasing number of policy makers are questioning this. Influential German board member Isabel Schnabel issued a strongly worded warning earlier this week about the inflationary impact on house prices of the ECB’s current stance. Elsewhere in Europe, UK retail sales recovered strongly in January, keeping the UK on track for a third consecutive rate hike at the next Bank of England policy meeting in March. 5. Crude further slides on Iran’s optimism; Numbers of US rigs due to crude oil prices fell after reports that Iran and the West are closer to a deal that in return would forgo further progress with its nuclear program. Analysts say a deal would pave the way for the return of as much as 1 million barrels of oil per day to global markets, although the net effect is difficult to predict as no reliable information is available on the wealth of Iran’s oil industry to ramp up production, and much of the current production is already leaking through unofficial channels to world markets – particularly to China. At 6:30 a.m. ET, futures were down 2.3% to $89.72 a barrel, while futures fell 2.1% to $91.06 a barrel. The number of rigs and weekly data from the CFTC will follow later on Friday.

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