EMEA Morning Briefing : Shares Seen on Hold as -2-

Powell Says Fed Is on Track to Raise Rates in Two Weeks

Federal Reserve Chairman Jerome Powell said he would propose a quarter-percentage point rate increase at the central bank's meeting in two weeks amid high inflation, strong economic demand and a tight labor market, offering an unusually explicit preview of anticipated policy action.

Mr. Powell said Wednesday that, before Russia's invasion of Ukraine last week, he expected the central bank would follow that initial rate rise with a series of increases this year.

Russia Batters Ukraine's No. 2 City Kharkiv, as Kyiv Offensive Stalls

KYIV, Ukraine-Russian forces pounded Kharkiv, Ukraine's second-largest city, with airstrikes in a bid to break the will of the country's resistance as Moscow's offensive toward Kyiv stalled amid fierce Ukrainian counterattacks and logistics mishaps.

Russian missile debris fell near Kyiv's central train station on Wednesday night, damaging a major heating pipeline, with the blast wave breaking the station's windows. Thousands of civilians, particularly women and children, are sheltering in the station at night as they await evacuation trains to western Ukraine. Ukrainian officials said the missile was shot down by Kyiv's air defenses.

Biden Expected to Ban Russian Ships From Entering U.S. Ports

The Biden administration is expected to ban Russian-flagged ships from entering U.S. ports, according to officials familiar with the matter, extending sanctions against the country following its invasion of Ukraine.

The move, which follows a similar ban in the U.K., would be largely symbolic. Russian commercial ships represent less than 1% of cargo volumes to the U.S., according to shipping and port officials. Russian firms own a large fleet of oil tankers but they usually aren't Russian-flagged.

China Services Activity Drops to Six-Month Low, Weighed by Strict Covid-19 Curbs

A private gauge of China's services sector retreated further in February and slipped to a six-month low, as Beijing's strict anti-coronavirus restrictions weighed on consumer spending.

The Caixin China services purchasing managers index dropped to 50.2 in February from 51.4 in January, Caixin Media Co. and research company IHS Markit said Thursday. The reading remained above the 50 mark, which separates month-to-month activity expansion from contraction.

Shares of Chinese Oil Companies Rise, Fueled by Higher Crude Prices

Shares of Chinese oil companies gained in morning trade, fueled by the rise in crude oil prices amid worries that Russia's invasion of Ukraine will result in severe disruptions to global supply.

Hong Kong-listed PetroChina Co. rose as much as 2.4% in early trade before paring gains, and was last 1.7% higher at HK$4.31. The energy major's one-week gains stand at 4.9%, taking the stock to its highest level since September 2019.

U.S. Officials Detail Efforts to Enforce Raft of New Russia Rules

Law enforcement and regulatory agencies are preparing to enforce a raft of new export control rules and initiatives as part of the U.S. government's response to the invasion of Ukraine.

Officials from the U.S. Justice Department, U.S. Commerce Department and other federal agencies spoke Wednesday at a conference on white-collar crime in San Francisco about their efforts to contribute to the Biden administration's response to Russia's military actions in Ukraine.

Russian Stock Market to Stay Closed for a Fourth Day

Russia's stock market will be largely closed for the fourth day in a row, the country's central bank said, amid continuing financial turbulence sparked by the invasion of Ukraine.

With limited exceptions, neither stock nor derivatives trading will resume Thursday on the Moscow Exchange, the Bank of Russia said in a statement late Wednesday local time.

Ukrainian Government Bonds Sink to New Lows Following Russian Military Escalation

Bonds issued by the Ukrainian government hit new lows Wednesday despite assurances from foreign governments and global institutions that they would continue to buttress Ukraine's wartime finances.

On Wednesday, a Ukrainian government bond coming due in September was quoted between 36 and 40 cents on the dollar, down from 65 cents on Friday, according to data from FactSet. A 2033 bond was quoted between 23 to 26 cents on the dollar Wednesday, down from 45 cents Friday.

Sanction Carve-Outs for Energy Aren't Enough to Keep Money Flowing to Russia

The aggressive sanctions against Russia left loopholes to allow payments for critical oil and gas supplies that fuel Europe-and the world's-economies. But businesses are instead going beyond, slapping a toxic label on anything to do with Russia, shunning its oil, refusing to issue insurance and cutting off financial transactions even with entities not on the sanctions list.

The result is deeper financial pressure on Russia, potentially triggering bankruptcies in industries that can't get access to cash or pay their bills. Other unintended consequences include higher prices for energy and crops like wheat, triggering greater inflation in the global economy.

Export Controls Against Russia Add to Uncertainty for Business

Restrictions on technology sales that the U.S. and its allies are clamping on Russia are adding to the uncertain climate for businesses, though how hard the export controls hit the Russian economy, trade specialists said, will depend on enforcement.

The controls, announced last week, restrict exports of semiconductors, lasers, information-security equipment and other technology to Russia's defense, aerospace and maritime industries and, U.S. officials said, are aimed at undermining President Vladimir Putin's defense capabilities and aspirations for Russia to lead in cutting-edge fields such as artificial intelligence and quantum computing.

Sweden's SEB Changes Course on Defense Stocks as War Tests ESG Rules

Sweden-based financial-services company Skandinaviska Enskilda Banken AB said it would permit some of its funds to buy shares of weapons makers and defense companies, reversing a position it adopted just a year ago as part of its commitment to investing based on environmental, social and governance principles.

SEB will from April 1 allow six out of its more than 100 funds to invest in companies that generate more than 5% of their revenue from the defense business. SEB announced the change in its sustainability report on Tuesday and listed the funds that will be allowed to invest in defense companies.

U.S. Worries Sudan Is Close to Leasing Russia a Red Sea Base

U.S. officials are increasingly concerned that Sudan's military junta will allow Russia to build a naval base on the country's strategic Red Sea coast.

Sudanese officials have suggested in recent weeks that they plan to resurrect a suspended 2020 agreement that would give Moscow a 25-year lease on a base in Port Sudan-a pact the U.S. had done its utmost to quash.

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Expected Major Events for Thursday

00:01/UK: CBI Service Sector Survey

01:01/IRL: Feb Ireland Services PMI

07:00/TUR: Feb CPI

07:00/TUR: Feb PPI

07:00/DEN: Jan Unemployment

07:00/ROM: Jan Retail trade

07:30/SWI: Feb CPI

08:00/HUN: Jan Retail Sales

08:15/SPN: Feb Spain Services PMI

08:45/ITA: Feb Italy Services PMI

08:50/FRA: Feb France Services PMI

08:55/GER: Feb Germany Services PMI

09:00/EU: Feb Eurozone Services PMI

09:00/ITA: Jan Unemployment

09:30/UK: Feb UK Official Reserves

09:30/UK: Feb CIPS / Markit Services PMI

10:00/EU: Jan PPI

10:00/CYP: Feb Registered Unemployed

10:00/EU: Jan Unemployment

10:00/CYP: Feb CPI

11:00/FRA: Jan OECD CPI

16:59/BEL: Jan PPI

All times in GMT. Powered by Kantar Media and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

03-03-22 0044ET