By Geoffrey Smith
Investing.com -- Russian President Vladimir Putin signals no let up in the war in Ukraine in a major speech. Walmart and Home Depot shed more light on the health of the U.S. consumer at the end of last year, while stock futures continue to reel from last week's stronger-than-expected economic data. Europe's economy is feeling the benefits of a sharp drop in energy prices at the end of last year. Here's what you need to know in financial markets on Tuesday, February 21st.
1. Putin speech points to war dragging on
A day after U.S. President Joe Biden’s surprise trip to Kyiv, Vladimir Putin prepared Russia for a long war in Ukraine in a keynote speech that cast the conflict as an existential struggle against the West.
Putin’s speech gave no hint of any change in policy, nor of any immediate economic or political constraints on Russia’s ability to pursue a war that has been the dominant issue in geopolitics for a year. It repeated largely familiar grievances that Russia hadn't started the war, and is struggling against a western plot to destroy it.
Elsewhere, China said it would present proposals for peace talks between the two sides by the end of the week, and criticized the West for “fuelling” the war with its repeated packages of military aid to Ukraine.
This week will see the anniversary of Russia’s invasion, the third time Putin has ordered Russian troops into a neighbor’s territory since 2008.
2. Walmart, Home Depot earnings
Walmart (NYSE:WMT) and Home Depot (NYSE:HD) report quarterly earnings, in what is likely to be seen as a litmus test for the health of the retail sector.
Analysts expect Walmart’s earnings to be largely unchanged from a year ago, despite a 4% rise in revenue. The retail giant is expected to have absorbed more of the rise in operating costs at the end of the year as consumer incomes weakened.
Home Depot’s adjusted earnings per share came in slightly ahead of expectations, but revenue was lower than street forecasts and the group's outlook for the year ahead was worryingly weak. The stock fell nearly 4% in premarket trading.
3. Stocks set to fall as rate fears persist
U.S. stock futures fell in premarket trading as equity markets prepared to reopen after the long holiday weekend.
Fears of higher interest rates appeared again to be the dominant worry, with bond yields still rising all along the yield curve in the wake of stronger-than-expected inflation and retail sales data last week.
By 06:20 ET (11:20 GMT), Dow Jones futures were down 274 points, or 0.8%, at a three-week low, while S&P 500 futures were down 0.8%, and Nasdaq 100 futures were down 0.9%.
In addition to Walmart and Home Depot, Medtronic (NYSE:MDT), Ingersoll Rand (NYSE:IR), Molson Coors (NYSE:TAP), Huntsman (NYSE:HUN), and Teck Resources (NYSE:TECK) all report quarterly earnings before the open, while Public Storage (NYSE:PSA), Palo Alto Networks (NASDAQ:PANW), Coinbase (NASDAQ:COIN), Caesars (NASDAQ:CZR), Diamondback (NASDAQ:FANG), and others report after the close.
4. Europe returns to growth, maybe
Business surveys in Europe suggested that the euro zone and U.K. economies are growing again, thanks to the sharp drop in energy prices at the end of last year. The pound rose over half a percent against the dollar but the euro slipped.
Preliminary estimates of the composite purchasing managers indices were both above expectations and above the 50 line that typically denotes economic expansion. In addition, the German ZEW index of economic sentiment rose for a fifth to its highest level in a year.
Analysts warned, however, that the figures excluded retail sales and construction – two sectors especially exposed to higher borrowing costs and falling real incomes.
5. Oil still adrift
Crude oil prices continued to struggle for direction, amid reports that suggest Russian oil continues to find its way to market easily enough despite western sanctions.
Global Witness reported on Monday that Shell (LON:SHEL) and Vitol – neither of which commented on the story – have sharply increased imports of fuel into Europe from Turkish refineries that have in turn increased their offtake of Russian crude.
By 06:35 ET, U.S. crude futures were up 1.1% at $77.42 a barrel, while Brent was down 0.1% at $84.00 a barrel.
The release of the American Petroleum Institute and U.S. government oil inventory estimates for last week are both delayed by one day owing to the public holiday on Monday.