U.S. equity futures are pointing to a sharply lower open (-1%), as investors are reacting to Russia's invasion of the Crimea region of Ukraine. Markets around the world have dropped, including the Russian market, which is down 10%. U.S. investors will be watching developments in Ukraine, but they will also be examining a large amount of economic data that is scheduled to be released today. The CBOE Volatility Index (VIX) sits at $14 from Friday’s close but we should see that move sharply higher. Traders will be buying option protection from the start of trading at 8:30 am CT. The ‘fear gauge’ has traded in a tight range recently and over the last year has not traded outside of $22 to the upside or $11 to the downside.
Treasuries are sharply higher as investors move to the safety of bonds in a Risk-off move. Oil (/CL) and Gold futures (/GC) are also bid up this morning as commodity prices are reacting positively. Europe's bearing the brunt of the global sell-off amid the escalating crisis in Ukraine. Euro-zone manufacturing PMI slipped to 53.2 in February from 54 in January. Japan fell over 1% but China out-performed and rose almost 1% as many speculate the government will unveil economic reform at its annual policy meeting this week. Economic data due today includes manufacturing numbers and auto sales which have recently fallen. Earnings season is winding down so all focus in the markets will remain on the geopolitical events in the Ukraine.
Stock Stories:
Citigroup (C) –Underperforming – The banking giant is being investigated for $400M in fraud from one of its subsidiaries in Mexico. The apparent theft has caused Citigroup to lower its Q4 earnings by $235M. The bank could face questions from U.S. authorities about its controls and disclosures. The company’s shares are down 2% ahead of the opening bell.
