Calm weekly open post-Wagner mini coup against Kremlin [Video]

The weekend was eventful with the unexpected rebellion of the Wagner Group against the Kremlin.

The first reaction of the financial markets to Wagner’s mini coup was relatively calm. Gold remained flat, and even sold into the $1930 level. The Dollar-Swissy moved a little near the 90 cents level. Crude oil was offered into the $70pb level, as nat gas futures jumped more than 2% at the weekly open, and specific stocks like United Co. Rusal International, a Russian aluminum producer that trades in Hong Kong, gapped lower at the open but recovered losses.

Equities in Asia were mostly under pressure from last week’s selloff in the US, while US futures ticked higher and are slightly positive at the time of writing.

The Wagner incident will likely remain broadly ignored by investors, unless there are fresh developments that could change the course of the war in Ukraine. Until then, markets will be back to business as usual. There is nothing much on today’s economic calendar, but the rest of the week will be busy with a series of inflation reports from Canada, Australia, Europe, the US, and Japan.

The Federal Reserve (Fed) will carry its annual bank stress test this week, to see how many more rate hikes the baking sector could take in and the potential for changes in capital requirements down the road.

The S&P 500 is down by more than 2% since this month’s peak, Nasdaq 100 lost more than 3% while Europe’s Stoxx 600 dipped 3.70% between mid-June and now on the back of growing signs that the aggressive central bank rate hikes are finally slowing economic activity around the world.

In the UK, the widening gap between the 2 and 10-year gilt yield hints at growing odds of recession in the UK, which should also prevent the pound from gaining strength on the back of hawkish Bank of England (BoE). Cable will more likely end up going back to 1.25, than extending gains to 1.30.