The volatility of the past few days on the forex, stock, bond and commodity markets seems to be justified by the arrival of one after another of extremely contradictory information, that the conflict in Eastern Europe is getting worse, and then that it is deescalating.
The news coming from the front seems to be affecting the stock markets, which are trying to stabilize after a disastrous start to the year.
A day of gains after a day of declines
The Dow Jones fell nearly 1.8 percent on Thursday, its biggest daily decline since November. The S&P 500 lost more than 2 percent and the Nasdaq nearly 2.9 percent, testing the 14,000-point area. One factor prompting investors to sell stocks may have been statements by the U.S. president that the threat of a Russian invasion of Ukraine remains high and Russia has not withdrawn its troops.
This morning, U.S. index futures appear to be making up some losses after news that U.S. Secretary of State Antony Blinken has agreed to meet with Russian Foreign Minister Sergey Lavrov in Europe next week. This may give hope for a diplomatic solution to the conflict between East and West. However, uncertainty may remain relatively high until the day of the meeting.
Oil supply higher by one million barrels per day?
On the oil market, we could potentially see the first downward week since early December. The price of a barrel of WTI crude fell to around $91 as the chances of a deal with Iran increased. Hopes for a settlement seem to outweigh concerns today about possible disruptions to oil supplies as a result of a possible conflict.
Reuters reported that an agreement to revive the 2015 Iran nuclear deal is taking shape, with a draft agreement outlining a sequence of steps that would eventually lead to the granting of oil sanctions waivers and restore about 1 million barrels of oil per day.
Capital flows to safe haven
Among commodities, rising gold prices may attract attention. Today, an ounce of gold costs nearly USD 1900, the highest in 8 months. Investors' fears about Russia's armed conflict with Ukraine and its consequences may contribute to price increases. The risk of realization of such a scenario may cause the capital to flow towards the safe haven, which is gold.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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