Australian shares are trading moderately higher, as news over the weekend of tougher Western sanctions against Russia dampen the flow-through of a global market rally on Friday.
The benchmark ASX 200 index rallied strongly in the afternoon to close up 0.7 per cent at 7,049 and the broader All Ordinaries index was also 0.7 per cent higher at 7,323.
That was well short of following the huge rally seen overseas after the ASX closed on Friday.
Wall Street's benchmark S&P 500 index rose 2.2 per cent on Friday, and the rally on most European markets was well above 3 per cent.
But that strong rebound from Thursday's heavy losses was before the US, UK, EU and Canada announced that some Russian banks would be cut off from the key global financial transaction service SWIFT, and that the Russian central bank would be denied access to much of its foreign reserves.
"Risk rallied on hard on Friday," noted NAB's head of FX strategy and markets Ray Attrill.
Rabobank strategist Michael Every said it was clear that the outcome of Russia's invasion of Ukraine was veering towards worst-case scenarios for the global economy and financial markets, with some banks reportedly backing away from Russian transactions in case of further sanctions.
"Russia is being placed in the same camp as North Korea, Venezuela, and Iran," he wrote in his latest note on the crisis.
"The $620 billion-plus in FX [foreign exchange] reserves held by the Central Bank of Russia (CBR) are sanctioned too – meaning that apart from the gold and only partially-convertible CNY [Chinese yuan] it holds, the vast majority are now unavailable. Even the gold is not liquid if nobody can use FX in exchange for it.
"There will be a complete collapse in the rouble today, with a 20 per cent drop at the open and nothing to support it from that point onwards.
A US dollar could buy 100 roubles on the Asian currency markets today, up from fewer than 84 on Friday, but there are reports that exchange rates are higher still for those trying to buy US dollars within Russia.
IG Markets analyst Kyle Rodda said traders were concerned about financial implications outside Russia too.
"A prolonged civil war brought about by regime change in Ukraine could send Europe into recession," he warned.
"At the same time, supply disruptions, especially in energy and food, could exacerbate inflationary pressures."
The Australian dollar was a little weaker at 71.76 US cents around 4:30pm AEDT.
Brent crude oil recovered after Friday's decline, bouncing back 5.3 per cent to $US103.15 a barrel.
Gold was also a little firmer at $US1,906 an ounce.
Mining leads gains
Mining stocks led the gains, up 2.7 per cent.
In the mining sector, mineral sands miner Illuka Resources (+5.3pc), rare earths producer Lynas (+6.9pc) and Gold Road Resources (+5.5pc) were among the strongest gainers.
The giant diversified miners BHP and Rio Tinto were 4.4 per cent and 3.2 per cent higher respectively.
Gains in the mining sector would have been bigger still, but Fortescue Metals traded ex-dividend today, meaning that those who bought the stock missed out on its latest shareholder payment. It was down 2.4 per cent as a result.
Energy stocks continued their recent climb, with Woodside Petroleum up 2.1 per cent.
Australian grain-handling giant Graincorp jumped 5 per cent to $8.40 on fears that Russia's invasion of Ukraine might be lengthy and disrupt the upcoming growing season for Ukrainian grains, resulting in higher demand and prices for Australian shipments.
Outside commodities, Blackmores (+9.8pc), Clinuvel Pharmaceuticals (+8.1pc), BlueScope Steel (+6.3pc) and Appen (+5.4pc) were leading gains on the ASX 200.
Insurance companies have been heavily sold down as the massive damage from floods in south-east Queensland and northern New South Wales has become apparent.
Insurance Australia Group was down 4 per cent, while Suncorp fell 3.2 per cent after revealing that its liability for the floods was likely capped at $75 million due to reinsurance policies.
Elsewhere, losses were being led by a combination of technology, financial firms and consumer cyclicals.
Tech firm Life360 continued its recent decent, losing 8.9 per cent to $5.20, with Tyro Payments down 5.5 per cent, Telix Pharmaceuticals off 4.8 per cent and Flight Centre down 3.4 per cent.
Zip announces Sezzle takeover
Buy now, pay later companies Zip and Sezzle have announced a merger under the laws of US state Delaware.
The deal will see Sezzle shareholders receive 0.98 Zip shares for every Sezzle share they currently own.
At the trading prices of both companies on the ASX at the close of trade last Friday, the deal values Sezzle at $491 million and is a 22 per cent premium on its last closing price.
At the conclusion of the deal, and a $199 million capital raising by Zip, its shareholders will own approximately 78 per cent of the combined company.
Zip said the money from the share sale "will help Zip strengthen its balance sheet and positions Zip for sustainable growth by providing more capital runway to execute on the potential synergies from the proposed transaction".
Both companies are still on a trading halt, but Zip's share price is down almost 50 per cent so far this year, while Sezzle's is off more than 40 per cent.
