- CHF leads amid haven flows, USD weakens
- Stocks drop
- Gold off overnight lows
The appetite for risk is very low right low. Sentiment continues to be dominated by headlines concerning Ukraine, Russia and the West. The latest headline was that Russia has apparently killed five people who tried to violate border. Inflation woes haven’t gone away either. The result? Investors have sold stocks, causing haven flows into the Swiss franc. Gold has bounced off its overnight lows and threatening to move decisively above $1900 hurdle.
It has already proved to be a very volatile start to the new week. The day started with gaps on index futures overnight, before a sharp rally on the back of news of a possible Biden-Putin meeting. However, the indices then gave up those gains to drop to fresh lows. This was in response to new from Russia where the government said there are “no concrete plans” for such a summit yet. This cast doubt on the meeting, although Moscow did not rule it out happening in the future. In addition, the hostilities in Donbass further weighed on sentiment.
As we head to the afternoon session, there’s an awful lot to look forward to in terms of data, and with holidays in US and Canada, it is going to be rather quiet. Any news from the Russia-Ukraine situation should move the markets sharply, as volumes are expected to be thin.
On the macro front, there was some good news from Europe earlier this morning as services PMIs came out stronger than expected, suggesting a faster recovery from the omicron blip. However, with sentiment dominated by geopolitics, European markets were unable to find much support.
Looking further out in the week, we have interest rate decision from the Reserve Bank of New Zealand, as well as the US GDP and PCE prints. On a micro level, we will get to see how strong London-listed banks performed in the last quarter, this week. The likes of HSBC, Barclays and Lloyds are set to post their full-year numbers. We will also here from Rolls-Royce, Home Depot and Moderna.
