Market Update – March 3 –

Stock markets mostly moved higher across Asia, but GER30 and UK100 futures are down -0.14% and US futures narrowly mixed, with the USA100 underperforming, against the background of the Ukraine war. Yields jumped higher yesterday and Bund futures are little changed this morning, as are Treasury futures, while in cash markets the U.S. 10-year rate has corrected somewhat. Aluminium hits record top; Oil, wheat at multi-year highs on supply woes.  Longer-term Black Sea supply curbs lift wheat to 14-year high – Brent hit $118/barrel & Gold hit $1950/ounce. Russia’s stature as a top supplier in oil, gas, metals, grain. Russia and Ukraine also account for 19% of corn exports and 80% of exports of sunflower oil, which competes with soyoil and palm oil.

Reuters: The United States is preparing a sanctions package targeting more Russian oligarchs as well as their companies and assets, as Washington steps up pressure on Russian President Vladimir Putin.

New talks between Ukraine and Russia were reportedly slated for today. US ‘hugely important’ delivery of Stinger missiles to Ukraine hailed ‘game-changer’ – Fake News ? Politcal propaganda ? who knows

Overnight – Powell signalled a less aggressive pace of interest rate hikes than investors had feared. BoE’s Cunliffe and Tenreyro suggested that the war in Ukraine will change the outlook”  – suggested the bank remains on course to deliver further rate hikes.The banks could remain on course to remove stimulus, but will move cautiously and maintain the flexibility to step in again if necessary. BoE’s Tenreyro says Ukraine war leaves “upside surprise” on inflation, but also deliver a trade shock. China Services PMIs down; Japan consumer confidence down.

• USD – USDIndex at 97.50
• US Yields 10-yr lower was over 13 bps higher testing 1.87%.
• Equities –  Nikkei lifted 0.7%, USA500 jumped 1.86% – Energy was the best performing subsector on Nikkei (+3.2%) financials jumped 3.17%.
• USOil – Rallied to $112.00; Brent hit $118/barrel.
• Gold – steady as risk appetite improved trades at $1926; Copper at 4.76 ; Palladium at 2,721. 
• FX markets – EURUSD  at 21-month low at 1.1055, USDJPY up 115.72 and Cable down to  1.3390 now from 1.3416. USDCAD breaks  below 200-Day SMA. AUDUSD breach and breaks 200-week SMA at 0.7320.

Today – Data releases will continue to take a backseat today, but include final services PMIs for the Eurozone and the U.K. today. The account of the ECB’s last policy meeting is also due, but will already look outdated in the light of subsequent developments.

Biggest FX Mover @ (07:30 GMT) GBPCAD (-0.36%) 6-day collapse from 1.7345 continues  down to 1.6915 now.  MAs  aligned lower, MACD signal line & histogram below  0 line, RSI 30 & falling, OB zone, H1 ATR 0.139, Daily ATR 0.9450.

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Andria Pichidi

Market Analyst

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