Spreadex Market Update
Markets bounce as China Covid unrest de-escalates
Equities Mostly Higher – Nikkei Struggling
Equities prices are seeing mixed action on Tuesday. US, UK and European stocks are pushing higher with the FTSE now testing the September highs around 7502. However, Asian stocks are coming under pressure as contagion around the events in China lean on sentiment. Additionally, the Nikkei is being hindered by fresh strength in JPY this week which has emerged through increased safe-haven demand.
Risk FX Bounces Back
In FX, better risk appetite on Tuesday is being well reflected with AUD and NZD both seeing decent gains across the European open on Tuesday. Both currencies are higher against USD while NZD remains the stronger of the two on the back of the recent shift in central bank expectations. The RBNZ signalled its intention to press ahead with further hikes while the RBA has recently pivoted, adopting a slower pace and looking to pause when it can.
Hawkish ECB Comments From Lagarde
Comments from ECB’s Lagarde today have been taken as a sign that the central bank is not yet done with its tightening program. The ECB chief noted that she would be surprised if inflation had peaked, warning that risks for now remain skewed to the upside. Looking ahead she advised that the bank still has work to do on inflation which may well take monetary policy into restrictive territory if needed.
Metals & Oil Rebound on USD Weakness
In the metals and commodities space, both gold and silver are turning higher today, taking advantage of a weaker US Dollar. Today’s US CB consumer confidence data will likely be the key driver for USD and consequently metals. Crude oil prices bounced back yesterday and are trading in the green today, after initially breaking down to fresh 2022 lows yesterday on the China covid story. European leaders have yet to agree a price cap on Russian energy. Some leaders have called for the price cap to be as low as $62 to hurt Moscow most while others have called for higher prices to be allowed.
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