After a few days of cautious optimism, risk-aversion kicks in during early Friday as Ukraine-Russia unveiled no clear progress on the peace talks. The sentiment soured further as Moscow blames Kyiv while the US signaled Russia’s readiness to use chemical weapons if the war drags. Adding to the risk-off mood was a fresh uptick in China’s covid numbers and a retreat from the previous signals of easing crackdown on IT and property companies.
It’s worth noting that Wall Street remained firmer on Thursday as Russia managed to pay bond coupons in dollars to some holders. Also positive for the sentiment the previous day was news that Turkey braces for a meeting between Russian and Ukrainian Presidents.
Even so, Asia-Pacific equities drifted lower while the US stock futures and European shares traded lower amid a fresh bout of risk-off mood.
While the US dollar recovered on a downbeat risk appetite, gold and yen failed to justify their traditional safe-haven status. Further, the geopolitical risks and comments from International Energy Agency (IEA) Head Fatih Birol favored Brent oil to rise for the second consecutive day.
BTC remains pressured inside a range surrounding $40,000 while the ETH dropped mildly while snapping a four-day uptrend.
The following numbers offer details of key asset performances on MARCH 18:
Hopes that Russia won’t default joined the Fed’s cautious optimism to favor US equities on Thursday before S&P cut Moscow’s credit rating and renewed risk-off mood.
The sour sentiment then gained additional burden from China as fresh daily infection jumped back while authorities also reversed previously hawkish comments, which in turn weighed on Asia-Pacific stocks.
That said, Japan’s Nikkei 225 couldn’t cheer BOJ’s inaction while European equities prints mild losses by the mid-session as Russia blames Ukraine for lack of progress in talks.
While the equities were down, the US dollar consolidates weekly losses with a mild recovery whereas gold braces for the worst week since November.
It’s worth noting that oil prices hold onto the previous day’s rebound whereas cryptocurrencies couldn’t find a warm welcome as Argentina eyes a law to disappoint Bitcoind and the likes.
Given the fresh challenges to the market’s optimism, not totally out of the box though, financial markets may witness a sober end to the volatile week.
The risk-aversion may weigh on the US equities more, as they’ve been up for most of the week, should telephone call between US President Joe Biden and China’s Xi Jinping reveal the Sino-American disagreements and Beijing’s support for Russia.
As a result, the US dollar may have some room on the upside and the gold may benefit as well. Further, BTC and ETH could also drop more while Antipodeans could consolidate weekly gains.
However, a light calendar and mostly known outcomes hint at no major moves until any surprises erupt.
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