European stocks are expected to open lower on Tuesday as investors continue to monitor the war in Ukraine and economic developments in the United States.

European stocks are expected to open lower on Tuesday as investors continue to monitor the war in Ukraine and economic developments in the United States.

The U.K.’s FTSE index is seen opening 2 points lower at 7,448, Germany’s DAX 50 points lower at 14,303, France’s CAC 40 down 29 points at 6,554 and Italy’s FTSE MIB 29 points lower at 22,653, according to data from IG.

Investors continue to watch the situation in Ukraine as ongoing peace talks between Moscow and Kyiv fail to make progress. On Monday, Ukraine refused to surrender the port city of Mariupol to Russian forces following an ultimatum from Moscow.

President Volodymyr Zelenskyy told Eurovision News that ultimatums won’t work as trapped Ukrainians will “fight till the end.”

U.S stock index futures were flat in overnight trading after Federal Reserve Chair Jerome Powell said the central bank is open to higher rate hikes to combat rising inflation.

Wall Street’s Monday trading session was volatile as Powell vowed to take “necessary steps” to curb inflation less than a week after the agency raised rates for the first time since 2018. Powell said “inflation is much too high” and added that rates could increase more than the previously approved 25 basis points if needed.

Shares in Asia-Pacific were mixed in Tuesday trade, as China Eastern Airlines shares fell after the carrier’s Boeing 737 passenger jet crashed in southern China on Monday.

Market watchers are also monitoring the omicron subvariant as it spreads across Europe along with one of the worst Covid-19 outbreaks in China since 2020.

There are no major data releases on Tuesday; earnings come from Kingfisher.

Saudi Arabia says it ‘won’t bear any responsibility’ for a shortage of oil supplies

https://www.foxnews.com/world/saudi-arabia-responsibility-oil-prices

Before the Bell: March 21

Equities

Wall Street futures were uneven early Monday as crude prices remain volatile and investors cautiously watch developments in Ukraine. Major European markets were choppy. TSX futures turned positive.

Ahead of the North American open, futures linked to all three key indexes wavered throughout the early premarket period. Last week, the S&P added more than 6 per cent for its best weekly showing since 2020. The Dow gained more than 5 per cent while the Nasdaq finished the week up 8.1 per cent. The S&P/TSX Composite Index finished Friday’s session up 0.22 per cent, ending at a record high.

“There appears to be a growing disconnect between what markets are doing and what is happening on the ground in Ukraine and the increasingly brutal measures that Russian forces are taking in trying to wear down resistance to their occupation, including the use of hypersonic missiles,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“While markets appear to be focusing on the fact that peace talks are taking place, there is also little evidence that they are actually leading anywhere, given the distance between the two sides in respect of what they will accept.”

Reuters reported Turkey’s foreign minister said on Sunday that Russia and Ukraine were nearing agreement on “critical” issues and he was hopeful for a ceasefire if the two sides did not backtrack from progress achieved so far.

Elsewhere, China’s Civil Aviation Administration of China (CAAC) said a Boeing 737 carrying 132 people crashed in mountains in south China on Monday. Flight data shows the Boeing 737-800 jet was just over an hour into its trip from the southern city of Kunming to Guangzhou, near Hong Kong, when it suddenly lost altitude.

In this country, a work stoppage at CP rail is entering its second day

More than 3,000 CP Rail conductors, engineers, train and yard workers represented by Teamsters Canada Rail Conference are off the job after the two sides failed to reach a deal before a weekend deadline set by the union and the company. The disruption has raised concerns about the impact on the already strained supply chain and has put pressure on Ottawa to help find a resolution.

On Wall Street, Nike Inc. reports earnings after the close of trading.

Overseas, the pan-European STOXX 600 was up 0.04 per cent at midday. Britain’s FTSE 100 rose 0.44 per cent. Germany’s DAX slid 0.11 per cent while France’s CAC 40 edged fell 0.18 per cent.

In Asia, markets in Japan were closed. Hong Kong’s Hang Seng fell 0.89 per cent, erasing early gains.

Commodities

Crude prices jumped in early going, driven by the possibility of EU sanctions on Russian oil.

The day range on Brent is US$107.06 to US$112.91. The range on West Texas Intermediate is US$104.08 to US$109.77. Both benchmarks were up by more than 3 per cent in early going after gaining more than 1 per cent last week.

Talks are scheduled this week between U.S. President Joe Biden and European Union governments for a series of summits aimed at toughening sanctions against Russia in response to the attack on Ukraine. EU governments will weigh whether to join the U.S. in placing an embargo on oil from Russia, Reuters reports.

CMC’s Michael Hewson also said Monday’s price gains also followed attacks by Houthi rebels on various Saudi Aramco oil and gas sites across Saudi Arabia over the weekend.

“Some production was temporarily disrupted, with the attack another unwelcome reminder of the uncertainty currently affecting global oil markets at this time,” he said.

In other commodities, gold prices rose as investors again opted for safer holdings.

Spot gold rose 0.2 per cent to US$1,924.45 per ounce. U.S. gold futures were down 0.3 per cent at US$1,924.00.

Currencies

The Canadian dollar was little change while its U.S. counterpart held relatively steady against a group of global counterparts.

The day range on the loonie is 79.12 US cents to 79.44 US cents.

“High oil prices are providing some support for the CAD but the broader relaxation in market volatility is helpful in underpinning the CAD near recent range lows,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“There is little new news to focus on for the CAD at the start of the week and there is little in terms of domestic data to focus on this week. That leaves the CAD still largely at the mercy of the external environment (risk mood) and the USD in the short run.”

There were no major Canadian economic releases on Monday’s calendar.

The U.S. dollar index, which measures the greenback against six peers, was slightly firmer at 98.335.

The euro was at US$1.1038, 0.17-per-cent lower, and Britain’s pound was at US$1.3156 off 0.16 per cent with the future direction of both dependent on the war in Ukraine, which has hurt expectations of European economic growth, according to Reuters.

Barrick Gold has ended a long-running dispute with Pakistan and will now start to develop one of the world’s biggest gold and copper mining projects under an agreement signed on Sunday. Under the out-of-court deal, an $11-billion penalty slapped against Pakistan by a World Bank arbitration court and other liabilities will be waived and Barrick and its partners will invest $10 billion in the project, Pakistan Finance Minister Shaukat Tarin said.

Warren Buffett’s Berkshire Hathaway Inc has struck an $11.6-billion deal to buy Alleghany Corp , the owner of reinsurer TransRe, just weeks after the 91-year-old billionaire bemoaned the lack of good investment opportunities. Alleghany adds to Berkshire’s already large insurance portfolio, which includes Geico auto insurance, General Re reinsurance and a unit that insures against major and unusual risks. Founded in 1929 by railroad entrepreneurs Oris and Mantis Van Sweringen, New York-based Alleghany operates mainly in property and casualty reinsurance and insurance through subsidiaries and investments.

Economic news

(12 p.m. ET) U.S. Fed Chair Jerome Powell speaks at the NABE Economic Policy Conference in Washington.

With Reuters and The Canadian Press

Saudi Arabia says it ‘won’t bear any responsibility’ for oil shortages

Saudi Arabia said Monday it “won’t bear any responsibility for any shortage in oil supplies to global markets” after attacks by Yemen’s Iran-backed Houthi rebels affected the kingdom’s production.

The announcement comes as the kingdom remains lockstep with OPEC and other oil-producing countries in a deal limiting increases in production and as energy prices rise higher amid Russia’s war on Ukraine. Already, Americans have had to pay record-breaking prices at the pump for gasoline.

The state-run Saudi Press Agency quoted the Foreign Ministry as saying that “the international community must assume its responsibility to maintain energy supplies” in order to “stand against the Houthis.”

The repeated Houthi attacks will affect “the kingdom’s production capacity and its ability to meet its obligations,” the statement added, threatening the “security and stability of energy supplies to global markets.”

Benchmark Brent crude oil stood at over $112 a barrel in trading Monday.

On Sunday, Yemen’s rebels launched a series of attacks targeting the kingdom’s oil and natural gas production. The Saudi Energy Ministry had said the attacks at the Yanbu petrochemicals complex on the Red Sea coast led to a temporary drop in oil output.

The drone and missile strikes ignited a fire at a tank at a petroleum distribution in the Saudi port city of Jiddah and affected production at the gas facility in Yanbu. The overall extent of damage at the installations remained unclear.

The Saudi government condemned the attacks as posing a threat to the security of oil supplies “in these extremely sensitive circumstances” in the global energy market.

The relentless wave of strikes on Sunday marked one of the most intense Houthi barrages on the kingdom, exposing Saudi defense vulnerabilities and recalling the dramatic September 2019 attacks on two key oil installations that knocked out half of Saudi Arabia’s total oil production.

Oil markets could lose 3 million barrels a day of Russian crude next month, IEA warns

LONDON — Oil markets could lose three million barrels per day (bpd) of Russian crude and refined products from April, the International Energy Agency (IEA) said on Wednesday, exceeding the one million bpd per day demand drop high prices are expected to cause.

The Paris-based watchdog said sanctions and buyer reluctance to purchase Russian crude were pushing up oil prices in a way that would hit personal budgets, drive up inflation, which has already hit multi-decade highs, and undercut economic recovery.

“The impact of loftier prices for oil and other commodities will … increase inflation, reduce household purchasing power and are likely to trigger policy reactions from central banks worldwide – with a strong negative impact on growth.”

“Surging energy and other commodity prices, along with financial and oil sanctions against Russia, are expected to depress world GDP and oil demand,” it said in a report.

It was the first monthly report on oil from the IEA, which represents 31 mostly industrialized nations but not Russia, since Russia’s invasion of its neighbour briefly sent Brent crude to a 14-year high of nearly US$140 a barrel.

“We see a reduction in total (Russian) exports of 2.5 million bpd, of which crude accounts for 1.5 million bpd and products 1 million bpd,” the IEA said in its monthly oil report.

Additionally, it projected lower Russian domestic demand for oil products.

“These losses could deepen should bans or public censure accelerate,” the Paris-based IEA said.

Russia exports 7 million to 8 million barrels of crude and products daily.

1. $200 oil could lead to global recession: Jeff Rubin
2. Canadian drillers are waking up as war leaves world begging for oil
3. Consumers, producers ride roller-coaster of energy instability

The IEA lowered its forecast for world oil demand for the second to fourth quarters of 2022 by 1.3 million bpd. For the full year it cut its growth forecast by 950,000 bpd to 2.1 million bpd for an average of 99.7 million bpd.

That would mean a third year of demand below pre-pandemic levels. Previously, the agency had expected demand to recover in 2022.

The Ukraine crisis has exacerbated the issue of limited output capacity.

Top OPEC+ producers Saudi Arabia and United Arab Emirates, which are rare among global producers, in having surplus capacity, are not fully opening their taps and the IEA does not expect output rises from Canada, the United States and others to eliminate global undersupply.

The world is set for a supply deficit of 700,000 bpd in the second quarter, the IEA said.

Storage levels in OECD countries in January stood at their lowest levels since April 2014, it said.

CP RAIL: The work stoppage comes at a bad time for Canada’s already strained supply chain

Canadian Pacific Railway Ltd. is winding down operations across the country after the company and union failed to reach an agreement by the 12:01 a.m. deadline on March 20.

The latest development since negotiations began in September has ended in finger pointing, with both sides claiming that the other initiated the work stoppage.

At 11:42 p.m. on March 19, Stéphane Lacroix, a spokesperson for Teamsters Canada Rail Conference (TCRC), issued a statement that said a lockout would begin after midnight.

“We are very disappointed with this turn of events,” said Dave Fulton, Teamsters spokesperson at the bargaining table. “They set the deadline for a lockout to happen tonight, when we were willing to pursue negotiations. Even more so, they then moved the goalpost when it came time to discuss the terms of final and binding arbitration.”

In the statement, the union clarified the differences between a lockout, which is initiated by the employer, and a strike, which is initiated by unionized employees.

At 2:20 a.m. on Sunday, CP released a statement saying that prior to the midnight deadline, Teamsters issued a news release that “completely misrepresented the truth.”

“Contrary to the TCRC Negotiating Committee’s claim, the work stoppage was initiated by the TCRC. In reality, it was CP, with the Director General, Federal and Conciliation Services, that remained waiting at the table with the desire to continue bargaining,” CP said in the statement.

Minister of Labour Seamus O’Regan Jr said in a tweet just after midnight that the railway and Teamsters were still at the table with federal mediators.

CP is one of the largest railway operators in Canada and the Teamsters union represents 3,000 locomotive engineers, conductors, train and yard workers across the country. A work stoppage comes at bad time for Canadian farmers, who depend on trains to deliver their supplies of fertilizer and pesticide before spring planting.

MORE ON THIS TOPIC

1. CP Rail will lock out 3,000 conductors and engineers if they don’t have a deal with the union by Sunday
2. Canada, U.S. shippers brace for possible CP Rail strike, latest supply-chain disruption
3. Bill Ackman’s Pershing Square takes new stake in CP Rail worth $280 million

Russia’s invasion of Ukraine, a top supplier of grains, has put pressure on Canada’s grain growers to pick up some of the slack and help avoid a global food crisis.

But a delay in shipments of fertilizer to farms this spring could reduce crop yields later in the year when global supplies may be tighter than usual due to the war, according to Saskatoon-based Nutrien Ltd., the world’s biggest maker of crop nutrients. About 75 per cent of fertilizer in Canada travels by rail, and fertilizer supply chains were “already stretched” this year, said Christine Gillespie, Nutrien’s vice-president of distribution and logistics.

Crude Oil – China & Saudi Arabia

Saudi Arabia regained the spot as China’s top crude supplier in the first two months of 2022, having been leapfrogged by Russia in December, while Russian shipments dropped 9 per cent as a cut in import quotas led independent refiners to scale back purchases.

Arrivals of Saudi crude totalled 14.61 million tonnes in January-February, equivalent to 1.81 million barrels a day, down from 1.86 million b/d a year earlier, data from the General Administration of Customs showed on Sunday.

Imports from Russia totalled 12.67 million tonnes in the two months, or 1.57 million b/d. That compares with 1.72 million b/d in the corresponding 2021 period.

Demand for Russia’s flagship ESPO crude from Chinese independent refineries, known as teapots, was hit by Beijing’s crackdown on tax evasion and illegal trading of import quotas.

The government also cut its first batch of 2022 crude import allowances to teapots, aiming to eliminate inefficient refining capacity.

Imports from Russia could tumble in March as buyers worldwide shun its cargoes in the wake of the intensifying Ukraine crisis. But Reuters reported that Russian producer Surgutneftegaz was working with China to bypass Western sanctions and keep up oil sales.

Sunday’s customs data showed that 259,937 tonnes of Iranian crude oil arrived in China in January, around the same level as in December, 2021, the first imports recorded by official Chinese data since December, 2020.

The shipments came as Tehran and Western countries hold talks on reviving a 2015 nuclear deal, pointing to a possible lifting of U.S. sanctions on Iranian oil exports.

No Iranian cargo were recorded by Chinese customs in February.

China’s official data also showed no imports from Venezuela, which is under U.S. sanctions as well, in January and February.

Scotiabank eliminates funds

Bank of Nova Scotia’s BNS-T +0.06%increase online brokerage, Scotia iTrade, is the latest financial institution to stop selling mutual funds with embedded advisory fees in preparation of coming regulatory changes that will no longer allow online trading platforms to collect trailing commissions.

Scotia iTrade stopped all sales of investment funds that include trailing commissions as of March 1, spokesperson Katie O’Dell said in an e-mail.

Earlier this year, Canadian Imperial Bank of Commerce and Royal Bank of Canada were the first to announce they would stop selling any mutual funds that pay trailing commissions in their discount brokerage businesses as of March 7, in order to align with regulatory changes that take effect on June 1.

Bank of Nova Scotia signs $1.3-billion deal to increase stake in Scotiabank Chile

Trailing commissions are payments a mutual fund company gives annually to an investment dealer for selling its investment products. They are supposed to compensate financial advisers for providing continuing advice to investors, and are embedded in a fund’s management expense ratio. But discount brokers are prohibited from providing advice to investors under regulatory rules,meaning they have collected billions in commissions without providing the intended service.

In September, 2020, after years of industry consultation, the Canadian Securities Administrators, or CSA, an umbrella group for all provincial and territorial securities commissions, announced the sales ban for discount brokers.

As a result, discount brokerages have been reviewing their product shelves and re-evaluating their mutual fund trading fees, which historically have been waived for mutual funds in favour of collecting trailing commissions from fund companies.

The same platforms typically charge around $10 a trade for stocks or bonds.

Scotiabank is still reviewing its mutual fund trade fees. Prior to March 1, Scotia iTrade waived fees for all mutual fund trades.

Both CIBC and RBC have already begun to charge fees for mutual fund trades. On March 7, CIBC Investor’s Edge began charging an upfront fee of $6.95 a trade when clients buy or sell mutual funds.

RBC Direct Investing, the online brokerage of Royal Bank of Canada, notified clients that, as of March 14, mutual fund purchases are now subject to a fee of 1 per cent of the gross trade amount, up to a maximum of $50. There will be no charge for selling mutual funds on the platform.

Canada’s largest online discount brokerage, TD Direct Investing, will continue to provide zero-fee trades for buying or selling mutual funds on its online platform even after June 1.

Bank of Montreal and National Bank of Canada have not yet released details of when they will stop selling trailing commissions from their platforms.

National Bank launched zero-fee commissions trades in 2021, and spokesperson Stéphanie Rousseau said the company will “keep offering free electronic mutual funds” trades, as it already does for stocks and exchange-traded funds, after June 1.

The coming changes have left many investors confused as to whether they will be automatically converted to a fund that no longer charges the fee, or if they have to provide verbal or written details to their online brokerage to move their funds.

On Friday, the CSA published an order for Ontario outlining the steps required by investment fund managers and discount brokerages to move investors away from mutual fund series with trailing commissions. Other CSA jurisdictions anticipate publishing exemptions shortly, the release said.

The order stated that, in most cases, investors will be switched to an equivalent fund that does not include a trailer fee, or a substantially similar series of the same fund, such as a fee-based F series fund. There will be no fees or tax implications for investors as a result of the switch. Discount brokerages will communicate the trades to investors once completed.

In a small percentage of cases, where an equivalent fund is not available, a management fee rebate will be given to an investor for a limited time.

Discount brokerages and fund organizations will also have a temporary exemption for up to 45 days after June 1 to accept any client who is transferring accounts to a discount broker and may have mutual funds with trailers. The exemption will allow the discount broker to accept and hold the fund, while a switch is initiated into another series of fund.

Laura Paglia, chief executive officer of the Investment Industry Association of Canada, said most fund companies have already identified the most appropriate non-trailer-paying series for each of their funds.

“The only difference for investors in the new series is that they will pay a lower management fee and, in some cases, may have a different distribution policy and/or currency in which the units are reported,” Ms. Paglia said. “In the limited circumstances where a non-trailer paying series of the same fund is unavailable, investors will be provided with information about their options.”

Asset managers, which manufacture the fund products, have begun to develop non-trailing versions of most funds. Last week, Purpose Investments announced it would be transferring its Series D funds into non-trailing funds, such as Series F, which is used for fee-based clients.

RBC Direct Investing said it is working with mutual fund companies to identify any trailer-paying funds held in clients’ accounts so that “applicable mutual fund companies can arrange to automatically switch such units into the equivalent non-trailer paying series.” The switches began last Friday.

“We believe that for the vast majority of our clients, these automatic switches will be the most straightforward approach to alignment with the new rules,” RBC spokesperson Kathy Bevan said in an e-mail.