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U.S. companies pull back from business dealings in Russia

In this article:
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Yahoo Finance's Julie Hyman and Brian Sozzi discuss the list of American companies that are reducing their exposure to Russia amid the invasion of Ukraine.

Video Transcript

JULIE HYMAN: Good morning. It is 9:00 AM on Tuesday, March 1. This is Yahoo Finance Live. I'm Julie Hyman. That is Brian Sozzi. Let's take a look at what's going on in futures this morning after what has been a volatile period. That volatility continuing. But we are seeing a little bit of weakness this morning.

It's not as we have seen in recent days, although we had that late-day comeback yesterday. And the NASDAQ off by a third of 1% right now. S&P futures down a fifth of 1%. Dow futures down almost a third of 1%. All of this-- life during wartime, I guess. A host of global companies work to reduce their exposure to Russia. We've got details.

And next hour, we'll discuss the potential hit to the Russian economy. Among those companies, by the way, European oil giants BP and Shell. Coming up, we'll speak to the chief financial officer of Chevron about that US oil majors exposure. Plus, Target comparable sales fell short of forecasts last quarter, but its full-year forecasts seemed to reassure investors. Those shares up by nearly 14%.

We're going to have Brian Sozzi's conversation with CFO Michael Fiddelke. But first this morning, we have to get the latest developments of what is going on between Russia and Ukraine. Reports of increased attacks on the part of Russia. Our Jennifer Schonberger is here to give us the very latest. Good morning, Jen.

JENNIFER SCHONBERGER: Good morning, Julie. Ukraine's capital bracing for an all-out assault as Russia escalates its invasion with a massive convoy of Russian ground troops making their way towards Kiev right now. At the same time, Russian forces struck the central square of the Ukrainian city of Kharkiv, an act Ukraine's Zelensky called a terror against the city. Russia's renewed aggression comes after a first round of talks between Russian and Ukrainian officials ended Monday without a ceasefire agreement but with the decision to meet again in coming days.

Russia's financial markets remained largely closed for a second day, as Russia's Central Bank has put in place a trading ban to try to limit the damage of tough new Western sanctions. But Russia's Central Bank has acknowledged that Western sanctions are stopping its ability to intervene and stem the Russian ruble from collapsing. The Kremlin's spokesperson Dmitry Peskov said during a press call Monday, according to reports, that, quote, "the economic reality has considerably changed."

The US and its allies have moved to stop Russia's Central Bank from using foreign reserves to support its currency. The Bank of Russia on Monday more than doubled interest rates to 20% to try to halt the plunge in the ruble, which still cratered some 30%. Western allies also cut a group of Russia's banks out of the SWIFT system. That's, of course, that crucial global payments messaging network.

Now, President Biden set to give his first State of the Union address tonight at 9:00 PM, where he will address the latest on the Russia-Ukraine situation. So a very fluid situation. Julie.

JULIE HYMAN: Yes, indeed. Thanks so much, Jen. Appreciate it. And we also have been monitoring the many, many companies globally that have been reducing their exposure, examining how to reduce their exposure, eliminating their exposure to Russia. There are a lot, a lot of different permutations of this, and we've been trying to piece through them this morning-- within the energy space, of course.

We know BP has said it is going to get rid of its Russian oil holdings. Shell has said the same. It's unclear exactly how. Total, by the way, says it is not going to put new money to work. So there's all kinds of different ranges of what various companies are doing here. It's unclear, because there were reports that the Russian government is saying it is not going to allow these types of divestment.

So it's unclear-- even if the intention is there-- execution-wise, how it is going to happen, who would then buy these assets, if companies are going to offload them. So a lot of questions around that. We've had a number of automakers and other types of companies-- Mastercard, for example, has said-- effectively, what Mastercard's announcement entails is that it is complying with sanctions and not allowing certain types of transactions to go through.

A lot of the automakers that have production operations have been pausing them. In some cases, again-- you know, Soz, there's sort of a mix here between companies that are aiming to get rid of operations-- those that are idling operations in some cases just because it is difficult to get business done on the ground at this point or to get supplies, for example. Then you have some of the entertainment companies. Also, Disney said it's not going to be releasing new movies.

So there are just a lot of different flavors of this that we are examining.

BRIAN SOZZI: And this is how an economy implodes, Julie-- big, multinational companies essentially leaving Russia here one after another. And another company we can add to the list is computing giant HP. CEO Enrique Lores is telling me in a conversation that he and his company have halted shipments to Russia. Take a listen.

ENRIQUE LORES: It is a very difficult situation. And the most important thing for us is really the humanitarian side. We have been in daily contact with our employees there and doing anything we can to protect them, to help them to go through this situation. At the same time, of course, we are following the regulations and the sanctions from the US.

We have stopped all our shipments to Russia. And we really hope that peace will be restored as soon as possible to the region.

BRIAN SOZZI: Let me get that. You have stopped shipments to Russia.

ENRIQUE LORES: We have stopped shipments to Russia, correct.

BRIAN SOZZI: And Julie, just like we saw with BP earlier in the week, with their divesting that nearly 20% stake in Rosneft, it's coming at a cost. So BP is seeing a $25 billion charge to get rid of those assets or exit Russia. It's also coming at a cost for a company like HP. Lores telling me that it's going to be about a $0.03 profit hit as it pulls those shipments out of Russia-- or just stops those shipments to Russia, I should say.

JULIE HYMAN: Well, in the case of the BP, there's still some uncertainties surrounding it, right? Because it's as much as $25 billion, but how is it actually going to offload that stake?

BRIAN SOZZI: Who's buying it?

JULIE HYMAN: It talked about selling it back to Rosneft, but is the Russian government even going to allow that transaction to go through? So there are a lot of questions about this. And I think we should make the point, as well, as we talk about the hit to the Russian economy and what the Russian people and Vladimir Putin are willing to withstand here. One of the overarching themes that we've talked about is that this response is probably unexpected on the part of Putin.

He didn't expect this level of sanctions. He didn't expect this level of Western companies saying they were going to pause or restrict operations in Russia. He didn't expect the level of Ukrainian military response. So it's very interesting. We'll see if that remains, and what the response on the part of Russia now is going to be. That still remains, I think, one of the big unknowns.

BRIAN SOZZI: Also the big unknown, Julie, is when will these companies go back into Russia. I didn't hear Lores tell me anything about, hey, Russia needs to do this so we will start shipments again. And we're not hearing these companies offer up any guidance in what they want to see here, which is-- suggesting that this situation-- at least from corporate America-- you know, they're planning for potentially not to do business in the country for, who knows, six months, a year.

It's unclear when these things will start to be reversed.

JULIE HYMAN: Well, the longer this goes on, the more the markets maybe get used to it.