A decent start to the week

European markets are starting the week on a positive note, with indices up close to 1% on the back of softer commodity prices and confirmed talks between Ukraine and Russia.

Broadly speaking, stock markets remain in a consolidatory phase and have been for almost a couple of weeks but they’ve certainly received a mild boost at the start of the week. Whether that can be sustained or not may well depend on whether we can see progress in talks this week.

Naturally, further talks between the two countries don’t guarantee we’ll see any substantial progress as we’ve seen all too often in recent weeks. But the fact that they’re still happening offers hope that we’re heading in the right direction and concessions we’ve seen on Ukraine’s side in regard to NATO membership could really help that along. Assuming Russia is truly intent on a deal and leaving Ukraine, of course, which many are sceptical about.

A certain portion of the declines we’re seeing in the commodity space, most notably oil, can be attributed to the lockdowns we’re seeing in China and the impact they’ll have on both activity and demand in the near term.

While that can be viewed as a positive from an oil perspective considering the supply/demand imbalance and very high price, it isn’t a sustainable solution, nor a desirable one. From a global economic perspective, it’s giving with one hand while taking from the other considering the supply chain issues that we’ve seen on the back of lockdowns over the last couple of years.

A key consideration for investors remains central bank tightening cycles, most notably that of the Federal Reserve. We’re seeing a lot more talk of inverted yield curves and while that doesn’t appear to be making investors particularly nervous as it did a few years ago, it could start to creep in more if the 2’s and 10’s invert as they did then.

Things may be looking up for bitcoin

Bitcoin is flying today after breaking through USD 45,500 resistance and taking off. Buoyed by improved sentiment, the cryptocurrency managed to break a level that has proven a key rotation point since the start of the year. The ascending triangle it traded in following that was technically bullish and the breakout confirms that.

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

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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