By Christine Idzelis and William Watts
The gyrations in commodities markets continued Tuesday, this time in nickel, where on the London Metal Exchange, prices jumped past $100,000 per ton before a trading halt.
“Investors should be prepared for further market volatility, and losses from here are still possible,” said Seema Shah, chief strategist at Principal Global Investors, in a note. “Even as headlines disrupt and distort the underlying picture, the investment trends that are emerging are based on fundamentals, and therefore should likely solidify in the coming weeks and months ahead.”
Shah said that given the chaos, U.S. equities “have held up well — particularly relative to Europe.” The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.58% has dropped around 15% so far in 2022, while the S&P 500, the U.S. large-cap benchmark, is down more than 12%.
“Not only is this a reflection of the underlying strength of the U.S. economy, but also America’s status as a net energy exporter,” she said. “By contrast, as a net energy importer dependent on Russian oil and gas, the European economy faces considerably greater downside economic risk.”
In U.S. economic data Tuesday, the National Federation of Independent Business said its small-business optimism index dropped 1.4 points to 95.7 in February , a one -year low. The largest number of small businesses since 1981 said high inflation is their chief worry, with many increasing prices to offset their own rising costs.
“Small businesses are really challenged,” said Luke Tilley, chief economist at Wilmington Trust, in a phone interview Tuesday. “They’re attributing a lot of that to inflation” in their cost of goods and labor, he said.
Meanwhile, the U.S. trade deficit climbed 9.4% in January to a record $89.7 billion as the U.S. bought more foreign oil, autos and other goods.
“The deficit is going to be a drag on first-quarter GDP,” said Tilley. “We’re buying a lot more than we’re selling abroad.”
Which companies were in focus?
Google parent Alphabet Inc. /zigman2/quotes/202490156/composite GOOGL -2.44% said Tuesday it had signed a definitive agreement to acquire cybersecurity company Mandiant Inc. for $23 a share or about $5.4 billion in cash. Mandiant shares fell 2%, while Alphabet shares rose 0.6%.
McDonald’s Corp. /zigman2/quotes/203508018/composite MCD +0.58% said it would temporarily close its 850 stores in Russia in response to the invasion of Ukraine. Shares of the Dow component dropped 0.7%.
How did other assets fare?
The yield on the 10-year Treasury note jumped 12.2 basis points to 1.87%, the highest since Feb. 25 based on levels at 3 pm Eastern Time. Yields and debt prices move opposite each other.
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.09% , a measure of the currency against a basket of six major rivals, was down around 0.2%.
Bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.15% was up 1.7% at $38,518.
In European equities, the Stoxx Europe 600 closed 0.5% lower, while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.61% rose 0.1%.
In Asia, the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.02% dropped 2.4%, while the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.40% fell 1.4% and Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK +0.24% declined 1.7%.
—Steve Goldstein contributed to this report.