• Ukrainian Foreign Minister Kuleba confirmed Russian rockets have been fired at Kyiv
• US President Biden authorised new sanctions including on Russian exports
• US stocks were able to close higher with the NQ (+3.4%) outperforming peers; US futures traded on a slightly softer footing overnight
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +2.1% after the cash market closed lower by 3.6% yesterday
• In FX, DXY faded recent gains and returned to a 96 handle, providing some reprieve to major counterparts
• Looking ahead, highlights include German Import Prices, EZ Sentiment Survey, US PCE and Durable Goods, Speeches from ECB's Lagarde and ECB's de Guindos and BoE's Pill, Eurogroup Meeting and Supply from Italy

US TRADE

• US stocks finished higher after reversing initial heavy losses as markets continued to price out chances of a more aggressive Fed hike next month and after the west refrained from the most severe sanctions against Russia.
• S&P 500 +1.4% at 4,286, Nasdaq 100 +3.4% at 13,974, Dow Jones +0.3% at 33,223, Russell 2000 +2.5% at 1,993.

GEOPOLITICS

• US President Biden authorised new sanctions including on exports which aim to maximize long-term impact on Russia and minimize the impact on Europe, while they will limit Russia's ability to do business in USD, EUR, GBP and JPY. Furthermore, US sanctions target Sberbank, VTB, Otkritie, Novikom and Sovcom of Russia with correspondent banking restrictions imposed on Sberbank. US also issued curbs on Americans dealing with debt and equity instruments for some state owned enterprises and private entities, issued general licenses including on energy, while sanctions were issued on Russian President Putin's inner circle and Rosneft's Chief Executive.
• US President Biden when asked about SWIFT removal, said it is an option but there is no plan to use it right now, while German Chancellor Scholz commented that they need to keep sanctions ready for later times when asked about SWIFT.
• US Senior US administration official said the US still has room to further tighten sanctions if Russian aggression accelerates further and is keeping the option open to impose import-export controls on less-advanced mainline chips such as those used in the Russian auto industry.
• IIF said "average Russians" will feel the economic cost of the sanctions and it will force CBR to hike rates and could cause a run on banks.
• European Commission President von der Leyen said steps agreed by EU leaders include financial sanctions and they are targeting 70% of the Russian banking market, as well as key state owned companies including defence. Furthermore, the export ban will impact Russia's oil sector by making it impossible to upgrade refineries and EU is limiting Russia's access to key technologies such as semiconductors.
• French President Macron said EU sanctions will be followed by French national sanctions on certain people which are to be announced later, while they will offer EUR 300mln of aid to Ukraine and military equipment, as well as target Belarus for penalties.
• UK PM Johnson announced an asset freeze against all major Russian banks and immediate asset freeze against VTB Bank. UK is also to bring in legislation to prohibit a wide range of high tech exports to Russia and exports to extractive industry, as well as prohibit the Russian state from raising sovereign debt. Furthermore, it is to bring in legislation to prohibit all major Russian companies from raising finance of UK markets and will look to extend full range of sanctions against Belarus.
• Russian Central Bank said it will provide any support needed for sanctions-hit banks and that banks have been well prepared in advance, while Ukraine's Central Bank banned operations with RUB and BYR, as well as banned banks from making payments to entities in Russia and Belarus.
• Russia's VTB bank, after being hit by UK sanctions, said it had time to prepare for the harshest scenario.
• Russia may retaliate for UK ban on Aeroflot flights to Britain, according to Tass citing the aviation authority.
• Australian PM Morrison announced the nation is to impose further sanctions on Russian individuals and said it is unacceptable that China is easing trade restrictions with Russia at this time. Taiwan will join democratic countries to put sanctions on Russia for invasion of Ukraine and Japanese PM Kishida said they will immediately impose sanctions in Russia in three areas including the financial sector and military equipment exports, while Russia's envoy to Japan later said there will be a serious Russian response to Japanese sanctions.
• US officials told Newsweek they expect Ukraine's capital Kyiv to fall to incoming Russian forces within days, and the country's resistance to be effectively neutralized soon thereafter, while western allies saw Kyiv falling to Russian forces within hours (comment was made at 18:46GMT), according to Bloomberg.
• Ukrainian Foreign Minister discussed plans with US Secretary of State Blinken to deliver new defensive weapons to help Ukraine defend itself and House Speaker Pelosi said she wants to provide Ukraine with USD 600mln in lethal defence weapons.
• There were reports of heavy explosions rocking the Ukrainian capital of Kyiv and US Senator Rubio tweeted it appeared that at least three dozen missiles were fired at the Kyiv are in 40 minutes, while Ukrainian Foreign Minister Kuleba confirmed Russian rockets fired at Kyiv and President Zelensky also noted Russia resumed missile strikes at 04:00 local time/02:00GMT.
• US President Biden will meet with heads of states and government from NATO countries at 14:00GMT/09:00EST Friday.

APAC TRADE

EQUITIES

• APAC stocks mostly gained after the firm rebound on Wall St.
• ASX 200 was capped amid a slew of earnings and with outperformance in tech offset by weakness in miners and financials.
• Nikkei 225 outperformed and reclaimed the 26k status with exporters underpinned by a more favourable currency.
• KOSPI gained with index heavyweight Samsung Electronics underpinned as it launched global sales of its flagship smartphone and latest tablet which have attracted record pre-orders.
• Hang Seng and Shanghai Comp. were mixed with the mainland underpinned after the PBoC boosted its daily liquidity operation which resulted in the biggest weekly cash injection in more than two years. although Hong Kong was constrained by losses in the energy majors and with financials subdued amid pressure in HSBC shares and after China Communist Party inspections on financial institutions.
• US equity futures took a breather from the prior day's resurgence; ES -0.6%.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +2.2% after the cash market closed lower by 3.6% yesterday.

FX

• DXY faded recent gains and fell beneath the 97.00 level on haven outflows and as chances of a 50bps Fed hike are slashed.
• EUR/USD nursed losses that were triggered by the geopolitical turmoil and close proximity to the conflict.
• GBP/USD rebounded off YTD lows after briefly testing the 1.3300 level to the downside
• USD/JPY retraced some of its recent advances but with the pullback stemmed by the positive risk tone.
• Antipodeans were supported due to their high beta statuses but with upside capped after mixed data from New Zealand which showed weaker trade figures but a return to growth for quarterly retail sales.
• RUB was steady around the 85.00 level against USD despite Russia resuming its air strikes on Ukraine.

FIXED INCOME

• 10yr USTs traded rangebound overnight after yesterday’s fluctuations that coincided with the impressive comeback of stocks on Wall St and despite the strong 7-year US auction. Bunds were lacklustre beneath 167.00 amid the haven outflows and 10yr JGBs were on the backfoot with prices not helped by the improved risk tone and the mixed results at the 2-year JGB auction.

COMMODITIES

• WTI and Brent gained on Russia's continued offensive in Ukraine with Brent crude remaining above USD 100/bbl.
• US President Biden said they will release additional oil from the SPR as warranted and that oil and gas companies should not exploit the crisis and hike prices, while Japan's Industry Minister said they will appropriately deal with an oil release from national reserves in cooperation with relevant countries and the IEA.
• Spot gold nursed some of yesterday's losses after briefly giving up the 1900/oz level.
• Goldman Sachs recently commented that the rally for gold has a lot further to go on the situation in Ukraine and prices and that prices could reach as high at USD 2,350/oz if there is a build in demand for ETF
• Copper futures benefitted from the mostly constructive overnight mood.

CRYPTO

• Bitcoin traded marginally higher alongside the improved mood across risk assets.

NOTABLE APAC HEADLINES

• PBoC injected CNY 300bln via 7-day reverse repos with the rate at 2.10% for a CNY 290bln net injection.
• PBoC set USD/CNY mid-point at 6.3346 vs exp. 6.3363 (prev. 6.3280)

DATA RECAP

• Tokyo CPI YY (Feb) 1.0% vs. Exp. 0.6% (Prev. 0.5%)
• Tokyo CPI YY Ex. Fresh Food (Feb) 0.5% vs. Exp. 0.4% (Prev. 0.2%)
• Tokyo CPI YY Ex. Fresh Food & Energy (Feb) -0.6% vs. Exp.-0.6% (Prev. -0.7%)
• New Zealand Retail Sales Volumes QQ (Q4) 8.6% (Prev. -8.1%)
• New Zealand Retail Sales YY (Q4) 4.4% (Prev. -5.2%)
• New Zealand Trade Balance (Jan) -1082M (Prev. -477.0M)
• New Zealand Exports (Jan) 4.86B (Prev. 6.07B)
• New Zealand Imports (Jan) 5.94B (Prev. 6.55B)

EU

DATA RECAP

• UK GfK Consumer Confidence* (Feb) -26 vs. Exp. -18.0 (Prev. -19.0)

US

NOTABLE US HEADLINES

• Fed's Waller (voter) said it is too soon to judge how Ukraine conflict will impact the world or US economy and concerted action to rein in inflation is needed. Waller said rates should be raised by 100bps by mid-year and there is a strong case for a 50bps hike in March if incoming data indicates economy is still exceedingly hot, but added it is possible a more modest tightening is appropriate in wake of Ukraine attack, while he also stated the Fed should start trimming the balance sheet no later than the July meeting, according to Reuters.
• Fed's Mester (2022, 2024 voter) said the unfolding situation in Ukraine will be a consideration in determining the appropriate pace at which to remove accommodation and the events in Ukraine have implications for medium-run economic outlook in the US, while Mester reiterated she does not think a 50bp move in March is compelling.
• Fed's Barkin (2024 voter) said they will have to see if Russian incursion changes arguments for policy normalisation and that the US is not that exposed to the Russian economy.
• US President Biden decided on his Supreme Court pick which could be announced as early as this Friday.