Those hoping for a quiet end to the week were caught out as late news emerged of a possible clash between Ukrainian and Russian forces.
UK markets
Aside from gold miners, which are having a difficult session, the general revival in risk appetite carried most stocks higher. It was looking fairly rosy until the final part of the session, when newswires began reporting increased conflict in Ukraine, with reports indicating Ukrainian action had destroyed part of the Russian convoy. This was sufficient to send markets tumbling, with the DAX leading the way as ever, although the FTSE was holding above the 6700 level as the last half-hour began. BHP has enjoyed a good bounce today but the company will need to elucidate its plans more clearly next week at its full-year results. From a valuation perspective the company still looks tempting versus its peers, and this should help provide steady buying pressure that will push the shares higher.US markets
US indices dropped back, with progress hampered by a drop in the Empire manufacturing number back from a four-year high and a slump in the Michigan confidence index to its lowest level since November. This left markets broadly unaffected, but the news from Ukraine began a period of selling, although once again the US’s distance from the conflict meant the reaction was more muted. With the weekend looming, the possibility remains that geopolitical risk has come back on the agenda. Traders will be anxiously scanning their newsfeeds for any sign of a Russian response over the coming hours.Commodities
The return to equity markets has taken a bite out of gold once again, leaving the metal floundering below $1300, before bouncing back as risk aversion returned with a vengeance. If the weekend sees more news that would cause equity markets to worry, gold could see more gains in the direction of $1320. Oil’s small bounce turned into a significant move higher as markets reacted to the news, claiming back lost ground thanks to revived fears about supply worries.FX
Gains in USD/JPY were wiped out by the afternoon headlines, and USD/JPY’s previous move towards ¥103 now looks in jeopardy. The reaction in GBP/USD was limited, with most traders unwilling to sell the pound following this week’s move, preferring instead to wait until Wednesday’s BoE minutes. For a real bounce to occur, sterling bulls need to see more than one policymaker vote for a rate hike, and if none do so then the 200-DMA could be rapidly breached, putting the currency pair on course for a move back towards the sub-$1.6500 level.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.