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Geoffrey Smith — Russian bombing sets fire to Europe’s biggest nuclear power station, but no radiation leaked. European stock market slumps as the possibility that loopholes in existing sanctions are closed to stop Russian commodity exports is causing euro and european stock markets to plummet. Overnight, gains in wheat and nickel have led to commodities prices registering their largest weekly gain since 1960. The Federal Reserve is likely to continue its 25-basis point increase in interest rates this month with the U.S. monthly payrolls report due. What you need to know for financial markets Friday, March 4th.

1. Russian forces seize Europe’s largest nuclear power plant

Russian forces took control of Europe’s largest nuclear power station, excluding Zaporizhzhya (eastern Ukraine).  Fire broke out in an apartment far from the reactors, but was quickly put under control. No damage was done to the nuclear reactors.

Fears of a possible radiation leak – stoked by popular memory of the Chernobyl disaster in northern Ukraine during the late Soviet period – have proved unfounded. They are completely different and retrofitted in a large containment vessel to ensure it is protected against any possible scenario.

Russia’s Ministry of Defense blamed the fire on a squad of Ukrainian provocateurs. Raphael Grossi of the International Atomic Energy Agency stated that Russian weaponry caused the fire. Lithuania’s Prime Minister said Russian shelling of the plant amounted to ‘nuclear terrorism’.

Russia and China had on Thursday voted against an IAEA resolution aiming to guarantee the safety of Ukraine’s nuclear installations.

2. Euro hits 22-month lows as sanctions fears deepen

The euro dipped below $1.10 for the first time since May 2020, as the progress of Russia’s war in Ukraine raised the likelihood of tougher Western sanctions that will hit the Eurozone economy disproportionately hard.

The European stock market declined further, with both the Italian and German markets predicting a 11% decline this week.

An aide to French President Emmanuel Macron had briefed reporters on Thursday that people should “fear the worst” after Russia’s Vladimir Putin repeated his determination in a phone call with Macron to pursue the war to its end.

The number of senior European politicians now willing to accept a complete ban on purchases of Russian energy exports – which were originally exempted from last week’s sanctions packages – is rising daily, as the scenes of devastation from Ukraine’s cities multiply.

3. U.S. Labor Market Recovery: Payrolls Seemed to Extend U.S. Employment Market Recovery

American economy added another 400,000 jobs from mid-February to continue its rapid replacement for the lost jobs during the pandemic.

It would still be an impressive result considering all the chaos caused by Omicron variant Covid-19 to travel, retail and hospitality.

It would also cement expectations for a 25 basis point hike in the fed funds rate when the Federal Reserve’s policy-making committee meets in two weeks’ time.

Although the unemployment rate will drop to 3.9%, from 4.2% in 2004, analysts will be focusing on trends with the labor force participation, which remains more than half a percentage point lower that its pre-pandemic levels of 63.4%.

4. Stocks to Open Lower

The negative newsflow from Russia and Ukraine is causing stocks to open later in the day.

The market had fallen 334 points (or 1.0%) by 6:20 am ET (1120 GMT) and was on track for its third loss in four weeks. The contract fell by 1.0% and the contract dropped 0.9%.

Stocks likely to be in focus later include software company Splunk (NASDAQ:), which received a vote of confidence from Helman & Friedland in the form of a 7.5% stake purchase.  Stocks of Gap and Broadcom (NASDAQ) are heading higher after Thursday’s well-received quarterly update. Costco stock (NASDAQ) is down due to warnings about container delays, increased labor costs, and shortages.

Best week for commodities since 1960s

Commodities saw their largest weekly gains since 1960s. However, buyers were forced to search for alternatives as tighter sanctions against Russia continued to impede exports.

At 6:25 AM ET futures had risen 2.2% to $110.06/barrel, and 2.0% to $112.66/barrel While that’s some way below the peaks seen earlier this week, it’s still a weekly gain of over 20%, the kind of increase that has always resulted in demand destruction and an economic slowdown in the past.

A day after an Estonian cargo boat sank after colliding with a mine in the Black Sea, wheat prices continued to rise. This effectively ended any chance for ships to obtain insurance coverage to travel into or out of the Ukrainian Black Sea ports. These two countries are responsible for almost 30% of the world’s wheat exports.

London’s price for a ton was at $29,823 per ton, the highest they have seen since 2008. This is due in part, however, the same worries about Russian supply.