Financial markets remain under the influence of information regarding the threat of an armed conflict between Russia and Ukraine. This week, macroeconomic data in the form of PMI indices may also play an important role.
Last week, stock markets in the USA experienced declines: the Dow Jones index lost nearly 2 per cent, Nasdaq over 1.7 per cent, and S&P 500 almost 1.6 per cent to the level of 4,300 points. In Europe today, the indices are trying to make up for some recent losses. The German DAX index seems to be defending the potentially key support at the level of 14800 points. In turn, the Euro Stoxx 50 may rise from the neighborhood of 4000 pts, where support for market bulls may also be found.
The mood may be slightly better this morning after reports that talks aimed at containing the escalating tension at Russia's border with Ukraine seem to be bearing fruit. French President Emmanuel Macron's office reported that U.S. President Joe Biden and Russian President Vladimir Putin have agreed to a summit in the coming weeks, after a series of talks between Macron and both leaders, provided Russia does not invade Ukraine.
Fed ahead of series of nine interest rate hikes?
It's not just the situation in Eastern Europe that could affect stock market sentiment. The No. 1 economic theme remains inflation risks and planned interest rate hikes in the US. James Bullard, chairman of the St. Louis Federal Reserve, has called for aggressive action on financial policy and warned that inflation could spiral out of control if there is no rate hike.
JP Morgan estimates that the Fed could decide on as many as nine interest rate hikes in a row, which seems to be the most hawkish view in the US market.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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