By Geoffrey Smith
Investing.com -- Ukraine and the West pour cold water on Russian talk of de-escalation. Germany braces for Russia to cut off gas supplies, while inflation races to new multi-year highs both in Germany and Spain. ADP will publish its monthly survey on private-sector hiring, while strong Micron and Lululemon results aren't enough to keep markets in positive territory in premarket. Oil prices rebound from Tuesday's rout ahead of U.S. government inventory data and a massive token heist sends shockwaves through the crypto space. Here's what you need to know in financial markets on Wednesday, 30th March.
1. Peace hopes downplayed as shelling continues.
Ukraine’s President and western officials poured cold water on suggestions that Russia’s withdrawal of forces from around Kyiv signaled a quick end to hostilities.
The White House said that “no one should be fooled” by Russian claims of a de-escalation around Kyiv, which came after Ukrainian forces recaptured the satellite towns of Irpin and Makariv. President Volodymyr Zelensky, meanwhile, said that positive talk “doesn’t silence the explosions of Russian shells” in much of the rest of the country.
The Kremlin that it saw little sign of encouragement from the Ukrainian side except in as much as it was now prepared to put its demands on paper – something that Moscow itself has not yet done.
2. Germany takes steps toward gas rationing; inflation surges to new highs
Europe’s largest economy took the first steps toward rationing natural gas supplies as it braced for a cut-off of Russian shipments from the start of April.
That’s the deadline that Russian President Vladimir Putin has set for European buyers to start paying for their gas in rubles rather than euros, something that would undermine sanctions on Russia’s central bank and state-controlled commercial banks. G7 ministers unanimously rejected that demand earlier in the week.
Vice-Chancellor Robert Habeck said the government has activated the first “early warning” stage of a three-stage emergency plan, the final stage of which would lead to rationing and an immediate impact on German industry, given that household demand will be given priority.
The announcement came on the same day that sharp rises in energy prices drove German inflation to a new high in March. Data from the country’s largest federal states showed the annual CPI running at close to 8%. A preliminary estimate for German inflation is due later in the day. Elsewhere in Europe, inflation in Spain hit 9.8%, its highest in nearly 40 years.
3. Stocks set to open lower despite Micron, Lulu results; ADP data eyed
U.S. stock markets are set to open lower, giving up some but by no means all of the gains that they made on Tuesday in reaction to signs of progress toward a ceasefire in Ukraine.
By 6:15 AM ET, Dow Jones futures were down 124 points, or 0.3%, while S&P 500 futures were down 0.4% and Nasdaq 100 futures were down by 0.5%. The three main cash indices had gained between 1% and 1.8% on Tuesday.
Stocks likely to be in focus later include chipmaker Micron (NASDAQ:MU) and athleisure wear group Lululemon (NASDAQ:LULU), both of which reported stronger-than-expected quarterly earnings after the close on Tuesday.
The data calendar is headed by the latest revisions to fourth-quarter GDP figures, which will be largely historical. Of more current importance will be the development in mortgage applications and rates, and the ADP private payrolls survey for March, which is due at 8:15 AM ET.
4. Crypto heist
Hackers have stolen over $600 million worth of cryptocurrency from the network behind the game Axie Infinity.
Ronin Network, a program through which players can transfer money into and out of Axie, said it had uncovered a security breach that took place nearly a week ago, in which 173,600 ether and $25 million of USD Coin had been taken from its system.
The heist is one of the biggest in the crypto space and will revive long-standing concerns about custody vulnerabilities in the asset class. It comes a couple of months after the Department of Justice brought charges against two people in connection with the Bitfinex heist, a development that appeared to reassure users that the transparency of blockchain networks was an effective defense against such thefts.
5. Oil rebounds after rout as U.S. inventories fall again
Crude oil prices rebounded on the prospect of a worsening standoff between Europe and Russia on the issue of energy supplies.
That follows a sharp fall on Tuesday caused by hopes for peace in Ukraine and – more significantly – falling demand in China due to the Covid-19 lockdowns imposed by various local authorities - including the city of Shanghai.
Prices had already found a short-term bottom on Tuesday after the American Petroleum Institute reported another 3 million-barrel drop in crude inventories last week, which may or may not be corroborated by the government’s data due at 10:30 AM ET.
By 6:25 AM ET, U.S. crude futures were up 1.8% at $106.11 a barrel, while Brent futures were up 1.7% at $109.55 a barrel.