• Russian President Putin authorised a special military operation to demilitarise Ukraine
• Multiple explosions were heard across several Ukrainian cities including the capital of Kiev
• US stocks finished lower (S&P 500 -1.8%) and US equity futures extended on losses overnight with APAC stocks also slumping
• European equity futures are indicative of a weaker open with the Euro Stoxx 50 future -3.8% after the cash market closed lower by 0.3% yesterday
• In FX, the DXY is notably firmer, EUR/USD sits on a 1.12 handle and USD/JPY lost 115.00 status amid JPY's haven appeal
• WTI and Brent gained on Russia's offensive in Ukraine which underpinned Brent to above USD 100/bbl for the first time since 2014
• Looking ahead, highlights include US GDP (2nd Estimate), PCE Prices Prelim, Initial Jobless Claims, Banxico Minutes, Speeches from Fed's Bostic, Daly, Mester, ECB's Schnabel, BoE's Bailey & Broadbent
• Earnings from Alibaba, Moderna, Norwegian Cruise Line, Occidental Petroleum, AB InBev, AXA, Deutsche Telekom, Mercedes-Benz, Moncler, Saint Gobain, Anglo American, Hikma Pharma & WPP.

US TRADE

• US stocks finished lower across the board due to warnings regarding a Ukraine invasion by Russia.
• S&P 500 -1.8% at 4,228, Nasdaq 100 -2.6% at 13,509, Dow Jones -1.4% at 33,131, Russell 2000 -2.2% at 1,943.

GEOPOLITICS

• Russian President Putin authorised a special military operation to demilitarise Ukraine. Putin said Russia does not plan to occupy Ukrainian territory and called on Ukrainian soldiers to immediately lay down weapons and go home, while he warned that Russia will react immediately in the case of foreign interference.
• Russian strategic bombers loaded with weapons took flight and Russian special forces entered Ukraine, while multiple explosions were heard across several Ukrainian cities including the capital of Kiev and there were also a series of explosions heard in the Belgorod province of Russia which is near the border with Ukraine. Furthermore, Ukrainian military command centres in Kiev and Kharkiv were attacked by missile strikes.
• Russian troops were said to have landed in Mariupol and Odessa, while Ukraine is to impose martial law and urged citizens to hide in shelters, as well as issued a missile warning for the capital. Ukraine military later stated that the air force is repelling an air attack by the invader and information about landing of Russian troops in Odessa is false.
• Ukraine's Foreign Minister said Russian President Putin started a full-scale war against Ukraine, while he added that this is an aggressive war and Ukraine will defend itself and win. There were also comments from Ukraine's UN Ambassador that the Russian UN envoy just confirmed his president declared a war on Ukraine, although the Russian envoy said it is not a war and that it is a special military operation.
• Ukraine Foreign Ministry said the purpose of Russia's offensive is to destroy the Ukrainian state and fighting spirit of Ukrainian military is high, while their defenders are ready to repel the aggressor state.
• Five Russian planes and a helicopter were shot down in eastern Ukraine, according to the Ukrainian military
• US President Biden said Russian President Putin has chosen a premeditated war, while Biden will address the American people on Thursday and will announce further consequences on Russia. Furthermore, the US will coordinate with NATO allies to ensure a strong and united response to Russian actions.
• NATO Secretary-General Stoltenberg said they stand with the people of Ukraine and that NATO will do all it takes to protect and defend allies.
• EU's von der Leyen said they condemn Russia's unjustified attack on Ukraine and will hold the Kremlin accountable.
• France's UN envoy condemned Russia for choosing war and said it must be held accountable at the UN Security Council.
• Russia is confident it can withstand Germany’s decision to halt the Nord Stream 2 pipeline certification, according to sources close to Kremlin and Gazprom cited by the FT.
• US State Department spokesperson Price said several 'detailed issues' remain unresolved with Iran and a nuclear deal could be days away if issues addressed.

APAC TRADE

EQUITIES

• APAC stocks slumped as geopolitical fears of an imminent strike on Ukraine came to fruition.
• ASX 200 fell beneath the 7k level with losses led by tech and miners despite Rio Tinto's record profit.
• Nikkei 225 slumped below 26k for the first time since late 2020, mired by geopolitics and haven flows.
• Hang Seng and Shanghai Comp. weakened as bourses were hit by the Russian offensive with Hong Kong dragged lower by tech as Alibaba shares slumped ahead of earnings.
• US equity futures extended on losses with the Emini S&P falling beneath 4,200.
• European equity futures are indicative of a weaker open with the Euro Stoxx 50 future -3.8% after the cash market closed lower by 0.3% yesterday.

FX

• DXY strengthened as Russia's military action against Ukraine spurred haven demand; overnight high 96.77.
• EUR/USD slipped beneath 1.1300 amid the geopolitical turmoil.
• GBP/USD tested 1.3500 to downside as the greenback strengthened on the Russian offensive.
• USD/JPY fell beneath 115.00 as JPY outshone its haven counterparts.
• Antipodeans suffered from their high-beta statuses.
• RUB underperformed as many condemned Russian actions with USD/RUB up 10% to approach the 90.00 level.

FIXED INCOME

• 10yr USTs were lifted above the 127.00 level as Russia's special military operation in Ukraine triggered a flight to quality which also saw Bund futures gain by more than a point. 10yr JGBs were also positive although the gains were only marginal compared with global counterparts despite the widespread risk aversion.

COMMODITIES

• WTI and Brent gained on Russia's offensive in Ukraine which underpinned Brent to above USD 100/bbl for the first time since 2014.
• US Private Energy Inventory (bbls): Crude +6.0mln (exp. +0.4mln), Distillate -1mln (exp. -1.8mln), Gasoline +0.4mln (exp. -1.5mln)
• White House said releasing more oil from SPR is an option on the table, while Australia is prepared to tap its oil reserves held in US if the Russia-Ukraine conflict impacts global supplies, according to the energy minister.
• Spot gold gained amid a haven bid and briefly approached near the USD 1950/oz level.
• Copper futures was stuck near the prior day's lows amid the geopolitical tensions.
• Aluminium prices reached a record high after breaching 2008 peak.

CRYPTO

• Bitcoin was pressured amid the broad risk off mood and fell beneath the 35k level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 200bln via 7-day reverse repos with the rate at 2.10% for a CNY 190bln net injection.
• PBoC set USD/CNY mid-point at 6.3280 vs exp. 6.3291 (prev. 6.3313)
• BoK maintained its base rate at 1.25%, as expected, with the decision unanimous. BoK forecasts GDP growth at 3.0% in 2022 and 2.5% in 2023, while it sees 2022 inflation at 3.1% (prev. 2.0%) and 2023 inflation at 2.0%.

DATA RECAP

• Australian Capital Expenditure (Q4) 1.1% vs. Exp. 2.6% (Prev. -2.2%)
• Australian Private Capital Expenditure 2021-2022 (AUD)(Est. 5) 140.8B (Prev. 138.6B)
• Australian Private Capital Expenditure 2022-2023 (AUD)(Est. 1) 116.7B

EU

NOTABLE EU HEADLINES

• ECB's Lane said inflation may be approaching its medium-term target and if inflation now move towards the medium term target, which seems to be the case at the moment, they will adjust monetary policy as they would no longer need to buy bonds, for example, to stabilize inflation at our target value in the medium term, according to Faz.
• ECB's Stournaras says APP should remain open-ended, APP should continue until at least year-end; Ukrainian crisis is deflationary over the medium-to-long term, according to Reuters
• Italian PM Draghi said the government will not extend the COVID state of emergency before 31st March and will gradually phase out the mandatory use of the COVID health pass.

US

NOTABLE US HEADLINES

• Fed's Daly (2024 voter) said the timing of hikes and balance sheet adjustments will be data-dependent, while she reiterated it is time to remove extraordinary accommodation and it is appropriate to begin adjustment in March absent any negative surprises. Daly added that by almost any measure, the economy is doing well and labour market gains have been broad based. Furthermore, Daly said it is too early to call how far rates will need to rise this year, while she expects to start hiking in March and raising them in subsequent meetings to get closer to neutral. Daly added geopolitics are not disrupting lift-off plans and raising rates at least four times would be her preference but most likely will need more than four rate hikes and policymakers will deliberate whether balance sheet reductions will happen after two rate or three rate hikes.