Market Update – February 15 – Markets Await the Diplomats

Stock markets ended flat into close, with Ukraine jitters easing a tad. USD & JPY remained bid, Gold has hit an 8-month high and Oil holds at $93.00. 2yr-10yr Yields at their narrowest since Feb 2019 but have cooled overnight. No leaks from closed door FED meeting, Bullard reemphasized his 100bps by July.  Asia stocks lower too. Ukraine had no response from Russia although Lavrov & Putin agreed to more diplomacy with the West. Scholz in Moscow today. UK Foreign Sec, Truss “Invasion highly likely but not inevitable”. Iron Ore futures slumped over 10% amid the continued crackdown on prices by China hitting AUD.

USD (USDIndex 96.15) stronger USD weaker EUR on unrest on its border and possible energy shortages.
US Yields 10-yr closed Friday at 1.996 cooled to 1.97%, 2-yrs remain elevated.   
Equities – USA500 -16pts (-0.39%) 4401 -(TSLA +1.83%) Musk gave $5.7bln shares to a charity in Nov. US500 FUTS now 4396.
USOil – Futures spiked to $93.80, trades at $92.70 now. 
Gold – Rallied (8-mth highs) to $1879 back to $1878 now.    
Bitcoin remains in the $45,000 to $42,000 range. 
FX marketsEURUSD down to 1.1324 USDJPY down to 115.29 & Cable to 1.3540.  

Overnight –  AUD RBA Mins, no surprises, analysts bring forward rate hikes to possibly August form year end. JPY GDP missed (1.3% vs 1.5% & previous quarter revised lower to -0.9%), GBP Earnings beat at 4.3% vs 3.8%, but inflation impacted real wages -0.8%. Tightening labour market too. – Unemployment steady at 4.1%.

European Open – The 10-year Bund future is up 68 ticks, outperforming versus Treasury futures, which are also slightly higher though. Markets are now increasingly worried that the Fed will act too aggressively on rates and stifle the recovery in the process. ECB’s Lagarde yesterday was eager to keep rate hike speculation at bay and even if the ECB pivots, a rate hike before the last quarter of the year, doesn’t really seem to be on the cards.  Ukraine jitters have eased somewhat, but continue to cloud over sentiment and DAX and FTSE 100 futures are down -0.3% and -0.2% respectively.

Today – EZ GDP, German ZEW, US Empire State Manu. PPI Final Demand, German-Russian meeting, Earnings Glencore, Restaurant Brands, ViacomCBS.

Biggest FX Mover @ (07:30 GMT) AUDJPY (-0.36%) From 84.00 highs on Thursday to 81.50 yesterday & back to 82.00 now. MAs aligned lower, MACD signal line & histogram remains below 0 line, RSI 43.50, H1 ATR 0.185 Daily ATR 0.878.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distribution.