Here are five things you must know for Friday, March 4:
1. -- Stock Futures Slump Russian Troops Take Europe's Largest Nuclear Plant
U.S. equity futures slumped lower Friday, while Treasury bond yields retreated sharply and oil extended gains to the highest levels in ten years, as Russian forces deepened their advance into Ukraine and seized the country's largest nuclear reactor.
A fire was reported at the Zaporizhzhia compound, in eastern Ukraine, but with the plant now under control of Russian troops, indications of radiation leakage or any damage to the region's largest reactor remain unreliable, adding new level of concern to the escalating conflict that has spiked commodity price increases in markets around the world.
President Joe Biden spoke with Ukrainian President Volodymyr Zelenskiy directly prior to the attack, the White House said in a statement, while US Energy Secretary Jennifer Granholm said there were no indications of elevated radiation readings, adding the reactors were “protected by robust containment structures and being safely shut down”.
WTI futures for April delivery were marked $1.58 higher at $109.23 per barrel while Brent contracts for the same month surged $1.17 to $111.66 per barrel, the highest in more than a decade.
European stocks are in the throes of their worst week in nearly two years, with the region-wide Stoxx 600 down 2.9% on the session to the lowest level of 2022.
On Wall Street, with investors focused on today's February jobs report and its implications for next month's Federal Reserve rate decision, stock futures were trading notably lower, but not at the overnight lows of the session. An elevated reading of the CBOE's VIX volatility gauge, however, likely sets up a wild Friday session, with both the headline jobs report risk and further developments from the Russia/Ukraine war.
Futures contracts linked to the Dow Jones Industrial Average are priced for a 305 point opening bell decline, a move that would take the average to its lowest levels in around 8 months, while those linked to the S&P 500 are priced for a 37 point retreat.
Nasdaq Composite futures are indicating a 115 point slump for the tech-focused benchmark as 10-year Treasury note yields fell to 1.792% in overnight trading.
2. -- February Jobs Report In Focus As Fed Rate Decision Looms
U.S. employers likely added more than 400,000 new jobs to the economy last month, a healthy increase that could tip the headline unemployment rate firmly below 4% and stoke further bets on near-term rate hike plans from the Federal Reserve.
The February employment report is expected to show a net addition of 425,000 new jobs, a move that could put some downward pressure on wage growth but will likely peg the nation's headline unemployment rate at around 3.9%, according to median forecasts.
Still, with average hourly earnings likely to have risen 0.5% from January, and 5.5% on the year, the Fed is still likely to see worrying wage increases that could extend or imbed the fastest rate of consumer price inflation in forty years deeper into the world's biggest economy.
That said, bets on a 25 basis point rate hike in March are unchanged at 94.9%, according to the CME Group's FedWatch tool, but are now forecasting a 64.1% change of a 1% Fed Funds rate by mid-June.
3. -- Oil Prices Surge On Russian Nuclear Attack, Iran Deal Concerns
Oil prices were back on the March Friday, taking Brent crude to the highest levels in more than a decade, as Russian troops seized the region's largest nuclear reactor and hopes faded for a weekend agreement with Iran that could return that nation's crude supply to the global market.
Russia's takeover of the Zaporizhzhia compound in eastern Ukraine has added to supply disruption concerns that have been compounded by both a growing investment boycott by major American drillers and the threat of sanctions by western world leaders.
OPEC's decision earlier this week to stick to its previous plans to boost output by a mere 400,000 barrels per month in April has added to that concern, as has the prospect of a weekend inspection by International Atomic Energy Agency head Rafael Grossi to Tehran, where the nuclear watchdog has said stockpiles of of enriched uranium have exceeded terms of the country's 2015 deal world leaders, threatening the revival of a pact with the U.S. government.
"Global oil majors including BP Plc, Shell Plc and Exxon Mobil Corp. are exiting Russia while buyers are shunning the nation’s crude as they navigate financial penalties and soaring shipping costs," said Saxo Bank's head of commodity strategy Ole Hansen. "With supply risks having become real we have entered a very volatile stage with no solution potentially forcing prices to levels that kills demand."
WTI futures for April delivery were marked $2.32 higher at $110.10 per barrel while Brent contracts for the same month surged $2.01 to $112.47 per barrel, the highest in more than a decade.
4. -- Costco Shares Slide As Supply Chain Pressures Cloud Solid Q2 Earnings
Costco Wholesale (COST) shares traded lower in pre-market trading after after it posted stronger-than-expected second quarter earnings but noted that supply chain disruptions and increased shipping costs would continue to pressure profit margins for the bulk discount retailer
Costco's overall revenue rose 16% to $51.9 billion, a tally that beat Street forecasts and helped produce a bottom line of $2.92 per share, as fading Covid shopping restrictions drove a better-than-expected 11.1% gain in same-store sales. Membership fee income rose 9.8% from last year to $967 million.
Despite all the supply chain issues, we're staying in stock and continue to work to mitigate cost and price increases as best we can," CFO Richard Galanti told investors on a conference call late Thursday. "From -- every day and every week, you're going to see in -- different items in different departments, certain things on allocation or short, but other things are filling its place. And again, some things are seeming to get a little better."
Costco shares were marked 2.9% lower in pre-market trading to indicate a Friday opening bell price of $517.55 each.
5. -- Musk Says UAW Free to Call Union Vote at Tesla's California Factory
Tesla (TSLA) shares moved lower in pre-market trading following Elon Musk's decision to allow the United Auto Workers' Union to hold a vote on membership at its California gigafactory.
In a move that reversed years of opposition from Musk, as well as criticism from President Joe Biden, the Tesla founder told his 76 million Twitter followers that the company "will do nothing to stop" the UAW from holding a membership vote "at their convenience."
The UAW would need to show that 30% of the Freemont workforce had signed a petition seeking a union vote, and then get a majority to agree to formal unionization.
Musk has clashed with the Biden administration over its repeated assertions that EV subsidies should favor manufacturers with union-lead workforces, and its fighting legal action with the U.S. National Labor Relations Board over alleged threats to remove stock options from employees who voted to join a union.
Tesla shares were marked 1.35% lower in pre-market trading to indicate an opening bell price of $828.00 each.
