Wall Street suffered losses at the end of Wednesday’s session as the crisis in Eastern Europe and its global economic consequences continued to hurt the market climate. The United States has accused Russia of war crimes and revealed another round of sanctions against Moscow this week, ostensibly to heed Zelensky’s call for more pressure on Russia from Western powers, as ongoing peace talks between Moscow and Kiev continue to fail.

The USA 500, USA 100 and USA 30 indices fell more than 1% on Wednesday as the negative climate and market expectations for a tighter monetary policy by the Fed and growing inflation concerns returned to spook markets as oil prices continued to rally. Markets are speculating that the Fed may raise interest rates by 50 bps in May, following aggressive comments by several policymakers this week. In a speech to the National Association for Business Economics, Fed Chairman Powell opened the door to more aggressive steps to tame inflation, which is now at a 40-year high.

Fears of inflation due to the protracted conflict and diplomatic stalemate continue to pump up energy prices, after briefly cooling down. The growing uncertainty has raised fears of potential additional sanctions against Russia from America’s allies that could end up disrupting supplies. Russian President Vladimir Putin said on Wednesday that hostile countries should pay for Russian gas in rubles. The comments came after the European Union said it intended to move away from Russian gas and might even target the country’s energy sector with sanctions over the conflict in Eastern Europe.

USOil soared over 5% and trades around $115.00, while UKOil rallied over 6% and peaked at $123.75. The disruption to Russian energy supply, the looming threat of EU sanctions and attacks on Saudi oil facilities all indicate that oil supplies will remain tight until the conflict is resolved. China and India, meanwhile, could benefit from buying Russian oil at a discount as long as they are not included in the list of countries targeted by Putin.

Meanwhile, the price of the precious metal Gold strengthened on Wednesday and recovered from the previous day’s losses. XAUUSD has seen gains above 1%, surpassing the previous day’s high and trading around $1945. Traders remain uncertain, between the Fed’s hints of more aggressive rate hikes in the future and the consequences of the ongoing  War in Ukraine as it enters its second month. An increase in interest rates that is too large is signaled to hamper growth, while the current inflation will create a higher burden and cost of living crisis. On the other hand, an additional shock wave from the conflict could turn price pressures into hyperinflation which will further complicate central bank policy. Thus, it is estimated that safe haven assets will remain in high price conditions for quite a long time.

XAUUSD

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD extends recovery above 1.0350 ahead of EU inflation, Powell

EUR/USD extends recovery above 1.0350 ahead of EU inflation, Powell

EUR/USD is extending recovery gains above 1.0350 in the early European morning this Wednesday. The US Dollar retreats further amid a better market mood. All eyes remain on the Eurozone inflation, US ADP and Fed Chair Powell's speech. 

EUR/USD News

GBP/USD recovers from 1.1940 as US Dollar refreshes day’s low, Fed Powell’s speech eyed

GBP/USD recovers from 1.1940 as US Dollar refreshes day’s low, Fed Powell’s speech eyed

GBP/USD has sensed responsive buying action around 1.1940 as risk aversion loses luster. The Bank of England is expected to advance its interest rates to 4.25% in Q1CY2023. GBP/USD has gained strength after testing the 200-EMA around 1.1960.

GBPUSD News

Gold bulls seek validation from $1,760 and Fed Chair Powell

Gold bulls seek validation from $1,760 and Fed Chair Powell

Gold price remains firmer for the second consecutive day, bounces off 10-DMA, short-term key support. Fed Powell’s first speech after November, hawkish hopes tease Gold sellers.

Gold News

Three on-chain metrics suggest Bitcoin price has bottomed, here’s where BTC is going next

Three on-chain metrics suggest Bitcoin price has bottomed, here’s where BTC is going next

Bitcoin price action has spiked 5% over the last 24 hours, hinting at the start of an optimistic scenario. Previous publications have already explored why BTC is ready for a bear market rally from both short-term and long-term outlooks.

Read more

Eurozone Inflation Preview: EUR/USD fate hinges on confirmation of peak inflation Premium

Eurozone Inflation Preview: EUR/USD fate hinges on confirmation of peak inflation

ECB President Christine Lagarde told European lawmakers on Monday that Eurozone inflation hasn’t peaked after reaching the highest levels on record in October. Will the Preliminary Eurozone inflation print confirm a peak in inflation?

Read more

Majors

Cryptocurrencies

Signatures