The news remains dominated by the Russian invasion of Ukraine, which is into its third month, but seems to have become stalemated by an effective, NATO supported Ukrainian defense. Russian forces have withdrawn from the northern part of the company, switching focus to an offensive aimed at fully capturing the eastern and southern coastal regions of Ukraine.
The war initially caused quite solid movements in some markets, especially in some agricultural commodities such as wheat and corn, but now seems to be having a primary effect of depressing some European currencies and global stock markets, possibly because the Russian government continues to make oblique nuclear threats. Of course, there are other fundamental factors weighing on stock markets, such as the threat of a return to stagflation, and rising interest rates.
Last week we witnessed weakness in stock markets almost everywhere, as well as weakness in European currencies and risk assets in general, with the British Pound and the Swiss Franc again reaching long-term lows against the greenback. The New Zealand Dollar is also making long-term lows. The biggest global stock market index, the S&P 500, is looking especially bearish, as it closed the week lower with the 1-year low not far away.
The coming week in the markets is likely to be less volatile as there are few releases of high importance scheduled. They are, in order of likely importance:
- US CPI (inflation) data – this will be very closely watched and is an extremely important piece of data for global markets. Analysts are expecting only a small month-on-month increase of 0.2%, and the result may begin to indicate a further slowing of inflationary momentum in the US.
- US PPI data – this indicates price changes in raw materials but is unlikely to be seen as of much importance as it comes after the CPI data.
- OPEC meeting
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