march 9  welcome to the home for realtime coverage of markets brought to you by reuters reporters you can share your thoughts with us at marketsresearchthomsonreuterscom us stocks surge as investors hunt for bargains oil drops 1622 est2122 gmt us stocks surged on wednesday after four straight sessions of losses as investors sought out bargains in stocks that have been hammered by concerns over the fallout of russia’s invasion of ukraine and as oil prices dropped sharply fighting continued as a russian air strike badly damaged a childrens hospital in the besieged ukrainian port city of mariupol on wednesday burying patients under rubble and injuring women in labor ukraine said read more but risk sentiment improved as oil prices plunged after the united arab emirates said the opec member would support boosting output into a market in disarray because of supply disruptions caused by sanctions imposed on russia as a result of the conflict read more the three main us stock indexes posted strong gains with the nasdaq composite ixic rising 36 blue chips were laggards though the dow jones industrial average dji still gained 2 of the 11 major sp 500 sector indexes nine ended in the green led by information technology splrct financials spsy and communication services splrcl which all posted increases of more than 3 energy spny was the main loser on the day falling 32 while utilities splrcu fell 08 here is your closing snapshot bofa securities in its latest research note on wednesday highlighted liquidity strains in us treasuries over the last two weeks the bank cited the washout of popular trades that reflect multiple rate hikes by the federal reserve this year such as shorting the frontend of the treasury curve flatteners as well as shorting the belly of the us tips market the exit from these trades has left the treasury market susceptible to liquidity issues bofa said the extent of nearterm uncertainty is evident in increased volatility the bank said citing the spike in implied volatility of treasuries across the curve on tuesday the ice bofa move index move which tracks traders expectations of swings in the treasury market hit 14003 the highest since march 2020 specifically the threemonth volatility of the us 10year treasury note hit 0568 basis points on wednesday a oneyear high aside from volatility bofa cited the uncertain utility of us treasuries in portfolios given the surge in inflation the riskoff environment has led investors to price out the more aggressive 50 basispoint hike at next weeks fomc meeting although the rate hike cycle remains firmly on track bofa said 100 basispoints of tightening is clearly justified due to inflation and labor tightness but beyond that the bank said the rate hike path is contingent on the geopolitical state of the world reflecting a fed response that may start to show concern for slower growth against an inflation backdrop that could ease over the year thiscreates scope for higher structural inflation and constrains the potential response of the nominal ust curve in a riskoff dynamic bofa said the bank noted that without a ceasefire or sharp easing of geopolitical tensions it expects us treasury illiquidity to persist fed or treasury actions may be needed to sustain us treasury market functioning europe’s benchmark index stoxx 600 closed 47 up in a market bounce that comes after days of heavy selling it is the biggest daily increase in the index since march 2020 the break from the heavy losses of recent weeks comes on the back of news of talks between russia and ukraine european autos sxap were up a staggering 95 today with travel and leisure sxtp not far behind gaining 83 european banks sx7p closed 75 higher basic resources sxpp and oil and gas sxep both of which had been beneficiaries of increasing geopolitical tensions pulled back to end the day 13 and 24 down respectively the australian dollar looks ripe for further upside as it continues to benefit from soaring commodity prices while also facing limited downside from economic or financial linkages or geographical proximity to the russiaukraine conflict according to analysts at standard chartered coal liquefied natural gas lng and petroleum made up around 28 of australia’s goods exports in 2021 “and would be boosted by higher energy prices” fx analysts steve englander and mayank mishra said in a report “similar price gains in other commodities like iron ore 34 of exports copper and aluminium 5 and agricultural commodities 12 of exports imply a significant improvement in australia’s terms of trade making the currency valuations even more attractive” they said data by the commodity futures trading commission cftc also shows that asset managers were covering shorts in the aussie current from near record levels in recent weeks and positioning remains near record lows that suggests “room for more gains in the short term” the analysts said meanwhile policies by australia’s central bank the reserve bank of australia should be supportive for the currency as it focuses on the inflation risks from the russian invasion of ukraine downside risks to the currency could emerge however if global growth concerns rise further and result in broad based risk aversion they said the aussie hit a fourmonth high of 07440 against the us dollar on monday and is up from a oneandahalfyear low of 06968 on jan 28 it last traded at 07325 standard chartered expects the australian currency to reach 075 this quarter 076 in the second quarter 078 by yearend and 080 by the end of 2023 data released on wednesday showed an omicronrelated stallout in labor market churn and mortgage rates changing course and falling for the first time since december there were 11263 million job openings in the united states in january marking a slight decline from the prior months upwardly revised  and record high  number according to the labor department analysts expected the number to hold steady at decembers previously stated 10925 million the phrase little changed appears 12 times in the latest job openings and labor turnover survey for january 2022 notes elise gould senior economist at the economic policy institute the job openings and labor turnover survey jolts usjolteci which measures labor market churn also showed new hires remained essentially flat and while layoffsfirings ticked higher the quit rate slid lower the hires rate remains higher than the quits rate in every major industry gould tweeted this indicates that when workers quit they are taking other jobslikely in the same sectornot dropping out of the labor force altogether the quit rate a favorite indicator of erstwhile fed chief and current treasury secretary janet yellen is often seen as a barometer of consumer expectations as workers are less likely to walk away from a gig in times of economic uncertainty the jolts report provided another piece to the puzzle regarding the extent to which the spike in covid infections due to the omicron variant threw sand in the engine of the jobs market recovery which has faced headwinds of a worker drought in recent months separately a dip in interest rates sparked an 85 jump in mortgage demand last week according to the mortgage bankers association mba the average 30year fixed contract rate usmgeci took a pause in its upward climb for the first time in nearly three months shaving off 6 basis points to 409 this prompted a 86 jump in applications for loans to purchase homes usmgpieci and a 85 increase in refi demand usmgreci the war in ukraine spurred an investor flight to quality which pushed us treasury yields lower said joel kan mbas associate vice president of economic and industry forecasting looking ahead the potential for higher inflation amidst disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other even with last weeks uptick overall mortgage demand is cooling having tumbled 36 from the same week last year as illustrated in the graphic below wall street pulled its own uturn snapping its losing streak in a robust rally with crude prices shifting into reverse and dragging energy spny from the head of the pack to the rear us stocks surge as investors hunt for bargains 1008 est1508 gmt us stocks are bouncing on wednesday after four straight sessions of losses as investors seek out bargains in stocks that have been hammered by concerns over the fallout of russia’s invasion of ukraine russia announced a new ceasefire in ukraine on wednesday to let civilians flee besieged cities but there were only limited signs of progress providing escape routes for hundreds of thousands of people trapped without medicine or fresh water read more oil prices are dropping over 5 as some investors take the view that the us ban on russian oil may not worsen a supply shock read more all major indexes are posting strong gains with the nasdaq composite ixic the best performer with a gain of 26 blue chips are laggards though the dow jones industrial average dji is still up 19 of the 11 major sp 500 sector indexes all but energy spny are in the green financials spsy are the best performer rising 34 while information technology splrct communication services splrcl and consumer discretionary splrcd are among outperformers here is your earlytrade snapshot why airline shares will not stay grounded 0941 est1441 gmt the crisis in ukraine and subsequent spike in oil prices has helped ground shares of us airlines for which oil is a major expense but there may be reasons for investors not to abandon them as they swoon since midfebruary the sp 1500 airlines index spcomair dropped 26 as of tuesdays close against a 68 fall for the sp 500 spx that includes a nearly 36 tumble for united airlines holdings and roughly 30 decline for delta air lines daln over that time in a note titled reasons to avoid panic selling aviation stocks cfra analyst colin scarola draws comparisons to 2011 when oil prices also spiked during the 2011 oil price spike buying the plunge in airline stocks paid off with 20plus outperformance of the sp 500 by yearend 2013 scarola writes even with oil prices often above 100 a barrel a group of airlines tracked by cfra posted compound annual earnings growth of 15 to 22 during 2011 to 2013 spurred by strong demand as the economy emerges from the pandemic underlying demand for air travel is robust in our view scarola says this sets airlines up to grow earnings again in 20222024 despite high oil prices indeed the sp 1500 airlines index was surging in early wednesday trade rising over 5 amid a broad market upswing the conflict between russia and ukraine once known as breadbaskets of europe is sending food prices to new record highs the russian federation and ukraine are responsible for 29 of the global wheat trade according to the world food programme chicago wheat futures have climbed around 60 so far this year threatening to raise the cost of key food staples such as bread due to the loss of exporters ukraine and russia and top producer chinas agriculture minister stating that the condition of its wheat crop may be the worst in history read more albert edwards the global strategist at societe generale warned about how the ukraine war is unleashing hell on earth for food prices adding that you can always throw on an extra sweater but you have to eat to survive just a decade ago surging food prices had triggered social unrest in many emerging markets edwards finds that food prices in emerging economies have risen far more sharply recently than even prior to the arab spring and far more than in developed economies in the nearterm the surging food and energy costs will trigger a demand crushing global recession according to edwards forcing governments to either subsidise households directly to offset the surge in cost of living expenses or impose 1970slike price controls financed by more quantitative easing energy stocks about to run out of steam 0909 est1409 gmt with nymex crude futures ending tuesday up 65 for 2022 its perhaps no surprise that the energy spny has been the top performing major sp 500 spx sector so far this year with a gain of nearly 39 however given a strong positive correlation between crude and energy shares as well as severely overbought conditions both markets look vulnerable to surprise downside reversals indeed the rolling 10week correlation between clc1 and spny now stands at 096 100 is a perfect positive correlation crude futures hit a high of 13050 on monday after failing to surpass this level in the wake of president bidens ban on russian oil imports on tuesday crude futures are under pressure on wednesday falling around 5 read more with this decline they are now around 201 times their 200week moving average putting them back below the 207208 disparity resistance barrier  click here read more traders will eagerly await the weekly close vs this barrier but the futures can be considered extended momentum remains severely overheated the weekly rsi is just shy of 9000 read more the energy sector itself is also severely overheated on a weekly basis its weekly rsi ended tuesday greater than 8000 since late 1989 the rsi has ended a week above 8000 only around 2 of the time of note historically it can be feast or famine for the energy group in terms of its performance on a weekly basis since late 2001 energy has been the best and worst major sp 500 sector the most times on a weekly basis 18 of the time in both cases although still relatively early in 2022 energy has been the best sector 67 of the time and the worst sector 11 of the time therefore mean reversion would suggest potential for some lean weeks ahead as investors may move back into beaten down groups read more meanwhile russia says it will achieve its goal of ensuring ukraines neutral status and would prefer to do that through talks read more for wednesdays live markets posts prior to 0900 est1400 gmt  click here terence gabriel is a reuters market analyst the views expressed are his own