Risk rebound as talks continue

Stock markets are rallying again at the start of the week as investors continue to be encouraged by reports of progress in talks between Ukraine and Russia.

While there has unfortunately been no de-escalation within Ukraine, there is hope that talks between the two sides could lead to a ceasefire. That may be premature, even misguided given how events have unfolded over the last few weeks. But stock markets have fallen considerably in that time and the recovery we’ve seen still pales in comparison.

The fact that the two sides are talking and in agreement that it’s heading in the right direction is obviously a good thing though, which is why we’re seeing some relief. There’s still a long way to go and a certain amount of damage as a result of the invasion is irreversible as a result of the sanctions that have been imposed.

Higher commodity prices could fall back to more reasonable levels though in the event of a ceasefire which would certainly ease the significant headwinds currently facing the global economy this year.

The EU has imposed fresh sanctions on Russian oil firms, but they have once again sought to do so in such a way that still enables purchases of the oil itself, just not other activities such as investments, technology transfers, etc. We’ve seen in recent weeks that sanctions can have unintended consequences though which can indirectly affect purchases. I wonder whether we’ll see extra efforts in the coming weeks to reduce that, which could further ease the pressure on oil prices.

Bitcoin lagging behind other risk assets

Bitcoin is pretty flat on the day and appears to be missing out on the risk rebound we’re seeing across the broader markets. Other risk assets are performing very well, just the kind of environment you would typically expect to see bitcoin flourishing in but that’s not really the case. In fact, it was trading lower in the day and has actually recovered those to trade near the day’s highs.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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