“Risk off” theme as Russian invasion continues

Intermediate

Macroeconomic/ geopolitical developments

  • The financial markets have again been dominated by developments in the Russian invasion of Ukraine, with shifts between “risk off” and “risk on” themes.
Ukraine war
  • More punitive sanctions have seen European and U.K. stocks under particular pressure given the likely impact on global trade and the global economy.
  • Global commodity prices have risen aggressively, with wheat, aluminium and energy prices surging higher
  • The S&P GSCI, a commodity index benchmark on 24 commodity markets, posted its third largest weekly rise on record (from 1970).
  • Additional inflation pressures from surging commodity prices alongside already high levels of inflation has maintained market worries about higher interest rates from major central banks.
  • Jerome Powell’s testimony to Congress highlighted an ongoing hawkish tone from the US Federal Reserve, despite the Russia/ Ukraine conflict.

Global financial market developments

  • Global stock averages were erratic last week with concerns over the developing conflict in Ukraine.
  • Share indices were mostly lower, led by the tech sector (the Nasdaq in the US) and European/ U.K. averages.
  • Higher yield pressures eased again last week, with the global safe-haven bond rally extending, driven by the Russia/ Ukraine fears.
  • The US Dollar and Japanese Yen rallied against the Euro and Pound, as safe havens.
  • “Risk/ commodity currencies” the Australian, New Zealand and Canadian Dollars all rallied.
  • Gold surged again as the ultimate safe haven.
Gold future
Oil future
  • Copper posted a strong rally for a bullish breakout from within a broader range to a multi-year high.
Copper

Key this week

  • Geopolitical focus:
    • Still closely watching for escalation of military developments in Ukraine
    • Also watching for potential for a ceasefire and for talks to improve.
  • Central Bank Watch: We get the European Central Bank (ECB) interest rate decision, statement and press conference on Thursday.
  • Macroeconomic data: The key data point for the week will be the release of US CPI on Thursday.
DateKey Macroeconomic Events
07/03/22German Retail Sales
08/03/22EU GDP
09/03/22Japan GDP; China CPI
10/03/22Australian CPI; ECB interest rate decision, statement and press conference; US CPI
11/03/22UK GDP; German CPI; Canadian Employment report

Editor in chief

Steve Miley is the Market Chartist and has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

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