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Daily market commentary: Unease spreads in the markets over the possibility of a Russian invasion of Ukraine
WTI crude oil prices eased down after reaching a fresh multi-year maximum during early Monday trading. There is unease in the markets over the possibility of a Russian invasion of Ukraine – which according to several Western governments is imminent – and the impact such a development may have on an already tight market. A Russian move on Ukraine would be likely to push the price of the barrel well above the $100 a barrel mark, as Western sanctions would severely limit Russian oil and gas output, compounding the supply-side issues that have driven global energy prices up.
Early Monday trading saw gold hedging down from the 2022 maximums reached on Friday, albeit not by much as geopolitical tension continues to build up. Russia’s invasion of Ukraine is, according to several Western authorities, imminent, and the markets are reacting by seeking safe-haven assets, in a dynamic that strongly supports the precious metal. However, gold gains are somehow limited by the other dominant narrative of the moment, the threat of inflation and the pace and timing of the US Federal Reserve’s monetary tightening. Investors remain alert to the possibility that the Fed is about to move decisively, and hike rates quicker and more often than previously expected. Against such a backdrop the dollar continues to gain ground over other major currencies, limiting gold gains due to the inverted correlation between the two assets.
Share markets traded significantly lower on Monday, alongside Asian benchmarks while US Futures hold losses registered at the end of last week amid a growing risk-off trading mood. Investors faced a sea of red on global markets, with all sectors down, at the beginning of a new week in which market sentiment continues to be weighed down by worsening geopolitical tensions in Eastern Europe. Markets are extending the sell-off sparked last Friday after the US raised the prospect of an imminent Russian invasion in Ukraine, despite continuing talks on the diplomatic front. Commodities such as grain and energy, as well as precious metals, are among the top performers today as both Russia and Ukraine play a big part in their production and exports. In addition, the risk-off trading stance can also be noticed over other asset classes such as CHF, JPY as traders seek safer havens. That said, the fact Bond markets stopped rising while USD and EUR currencies remained stable tends to suggest a “fear trading” mood which would signal the current sell-off in equities as temporary.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
