[av_revolutionslider id=’32’ av_uid=’av-a1kbp3p’]
- What appeared to be a temporary phenomenon of international trade constraints at the height of the coronavirus pandemic is now, one month after the start of Russia’s invasion of Ukraine, proving to be a truly global issue that is unlikely to vanish any time soon. Disrupted supply chains and countries’ efforts to secure sufficient raw materials, goods and technology at any cost are proving to be the new normal as the war in Ukraine continues.
- The days of low prices and cheap money are probably over, and it is not certain that today’s generations will see anything like that again. The price of oil above USD 100 per barrel, shortages of food, some basic raw materials, but also of technology, herald a much longer period of high inflation than we might like to admit today.
Indices
Stocks in the US have had a second profitable week, but are still in the red since the beginning of the year, with the worst off being the technology NASDAQ. While the DJIA and S&P 500 have written off 4.1 and 4.7 percent respectively year to date, the NASDAQ is losing over nine percent, having already lost nearly 20 percent in mid-March and approaching correction levels. As stock investors count on rapid rate hikes, riskier sectors and growth stocks, which include the technology sector, may see underperformance.
European equities stagnated during the week, and ended slightly in negative territory, with only stocks in the British Isles doing well (FTSE 100 +1.06%).
Asian equities notched up modest gains, particularly at the start of the week when Alibaba announced its intention to expand its share buyback programme from the current $15bn to $25bn. Japan’s Nikkei 225 index gained the most in the weekly appreciation, rising for nine straight days.
 |
US30 +0,31% |
|
US100 +2,32% |
|
US500 +1,79% |
 |
GER40 -0,66% |
Commodities
Oil is once again in investors’ sights, having its first profitable week after two declines. Brent added more than 11.5% and the price of US WTI rose by 8.8%. After falling below the USD 100 per barrel level the previous week, Brent prices have already hit the USD 120 per barrel level again in the past week.
Saudi Arabia has warned that it will not be able to take responsibility for its oil supply shortfalls due to ongoing attacks by Yemeni rebels, which is also helping the price to rise.
The ongoing conflict in Ukraine and Russian President Putin’s threats to demand ruble-only payments for gas add to the uncertainty in the market and increase the already high volatility.
After two weeks of declines, precious metals also ended the week in a slight plus, with rising inflationary pressures and the ongoing conflict in Ukraine helping gold to rise 1.6%. However, one risk limiting its upward movement is the strengthening dollar.
 |
Gold +1,6% |
 |
Silver +1,4% |
 |
BRENT +11,5% |
 |
NATGAS +13,9% |
Forex
Like the US Fed, the Bank of Canada has made it clear that it will fight rising inflation by significantly raising interest rates. If we add the rise in oil prices, the USDCAD currency pair is “doomed” to fall further. The price is currently at this year’s low, and after breaking 1.2450, the fall may continue to 1.230.
The Russian ruble hit three-week highs during the week after Russian President Putin threatened to demand payment in rubles from countries that buy oil from Russia. However, the price is still above 100 rubles per dollar and further significant appreciation with the ongoing military conflict is not on the agenda.
 |
EUR/USD -0,45% |
 |
USD/JPY +2,43% |
 |
GBP/USD +0,28% |
 |
USD/CAD -0,97% |
Macro
US Treasuries reached near 3Y highs at the end of the week on expectations of rising inflation and a more significant interest rate hike by the central bank. Jerome Powell clearly declared in his comments that the Fed will not hesitate to take a more restrictive approach. Although he believes the Fed has hesitated to raise rates, he is also optimistic that the central bank will be able to work with rates sensitively enough not to cause a recession.
German bunds have already added 30 basis points in March, pointing to the biggest monthly increase since 2011. This brings their yield close to 0% for the first time in a long time. As in the US, rising inflation and the expected end of bond buying by the ECB are the main factors.
What to watch out for this week
- Among the most anticipated data in the coming week will be Friday’s nonfarm payrolls for March, where 475,000 new jobs are expected after February’s 678,000. Average hourly earnings are expected to rise 5.5% on an annual basis and unemployment is expected to fall to 3.7%. The improving labor market could support expectations of a more aggressive approach by the Fed. Fed officials have stressed several times over the past week that we can expect several major rate hikes over the course of the year, even at the cost of an economic slowdown, as inflation is becoming enemy number one.
- On Thursday, the personal income and spending data of Americans will be released along with personal consumption expenditures data, which are very important for the Fed. The Core PCE Index is expected to rise 5.5% year-over-year, well above the Fed’s inflation target of 2%.
- Inflation data will also be released in Europe, where the CPI is expected to rise by a record 6.5% yoy. The ECB is in no hurry to raise rates yet, and according to its officials, it needs to taper its asset purchases first before addressing interest rates. In any case, the rapid rise in inflation may accelerate this process.
[includephp file=”wp-content/themes/ftmo-com/calendar.php”]
Error: Your Requested widget "FTMO Start Challenge " is not in the widget list.
- [do_widget_area av_blog]
- [do_widget_area av_everywhere]
- [do_widget id="categories-6"]
- [do_widget id="categories-4"]
- [do_widget id="categories-7"]
- [do_widget id="newsbox-3"]
- [do_widget id="recent-posts-4"]
- [do_widget_area av_footer_1]
- [do_widget id="text-8"]
- [do_widget id="text-13"]
- [do_widget id="text-14"]
- [do_widget id="text-12"]
- [do_widget id="text-16"]
- [do_widget id="text-18"]
- [do_widget id="text-20"]
- [do_widget id="text-23"]
- [do_widget_area av_footer_2]
- [do_widget id="nav_menu-19"]
- [do_widget id="nav_menu-26"]
- [do_widget id="nav_menu-20"]
- [do_widget id="nav_menu-21"]
- [do_widget id="nav_menu-22"]
- [do_widget id="nav_menu-23"]
- [do_widget id="nav_menu-24"]
- [do_widget id="nav_menu-25"]
- [do_widget_area av_footer_3]
- [do_widget id="nav_menu-4"]
- [do_widget id="nav_menu-27"]
- [do_widget id="nav_menu-10"]
- [do_widget id="nav_menu-11"]
- [do_widget id="nav_menu-9"]
- [do_widget id="nav_menu-13"]
- [do_widget id="nav_menu-15"]
- [do_widget id="nav_menu-17"]
- [do_widget_area av_footer_4]
- [do_widget id="nav_menu-5"]
- [do_widget id="nav_menu-28"]
- [do_widget id="nav_menu-8"]
- [do_widget id="nav_menu-7"]
- [do_widget id="nav_menu-6"]
- [do_widget id="nav_menu-14"]
- [do_widget id="nav_menu-16"]
- [do_widget id="nav_menu-18"]
- [do_widget_area av_pages]
- [do_widget_area eckb_articles_sidebar]
- [do_widget_area eckb_articles_sidebar_2]
- [do_widget_area eckb_articles_sidebar_3]
- [do_widget_area footer-ftmo-left]
- [do_widget id="text-10"]
- [do_widget id="text-11"]
- [do_widget id="text-9"]
- [do_widget id="text-15"]
- [do_widget id="text-17"]
- [do_widget id="text-19"]
- [do_widget id="text-21"]
- [do_widget id="text-24"]
- [do_widget_area footer-ftmo-right]
- [do_widget_area post-loop-footer-author]
- [do_widget id="text-2"]
- [do_widget id="text-4"]
- [do_widget id="text-3"]
- [do_widget id="text-5"]
- [do_widget id="text-6"]
- [do_widget id="text-7"]
- [do_widget id="text-22"]
- [do_widget id="text-25"]
- [do_widget_area tet]
- [do_widget id="nav_menu-2"]
- [do_widget_area widgets_for_shortcodes]
- [do_widget_area wp_inactive_widgets]
- [do_widget id="custom_html-18"]
- [do_widget id="recent-comments-2"]
Disclaimer
All information provided on this site is intended solely for the study purposes related to trading on financial markets and does not serve in any way as a specific investment recommendation, business recommendation, investment opportunity, analysis or similar general recommendation regarding the trading of investment instruments. The content, in its entirety or parts, is the sole opinion of FTMO and is intended for educational purposes only. The historical results and/or track record does not imply that the same progress is replicable and does not guarantee profits or future profitable trading records or any promises whatsoever. Trading in financial markets is a high-risk activity and it is advised not to risk more than one can afford to lose!
