Oil breaks price records again. The geopolitical situation is now in the focus of investors’ attention

by JustForex

Reports that the US authorities are waiting for a Russian invasion of Ukraine have led to a sharp decline in risk appetite in global markets, a trend that continues to this day. The US stock indices closed Monday with a decline. By the close of the Stock Exchange, Dow Jones Index (US30) decreased by 0.49%, S&P 500 (US500) fell by 0.38%, and the technology index NASDAQ (US100) closed at its opening levels. The Fed’s monetary policy and the escalating geopolitical situation in Eastern Europe remained the focus of traders’ attention.

In a speech yesterday, Fed spokesman James Bullard reiterated calls for faster rate hikes, though other officials were more cautious in their public statements. Federal Reserve Bank of Kansas City (FRB) President Esther George believes the Fed should consider selling bonds from its $9 trillion asset portfolio to fight high inflation.

European stock indices closed lower again amid rising geopolitical tensions in Eastern Europe. Germany’s DAX (DE30) decreased by 2.02%, France’s CAC 40 (FR40) lost 2.27%, Spain’s IBEX 35 (ES35) fell by 2.04%, and the British FTSE 100 (UK100) decreased by 1.69%.

“Germany is waiting for Moscow to take steps to de-escalate the conflict over Ukraine and, together with its allies, is ready to discuss European security with Russia,” German Chancellor Olaf Scholz said at a press conference in Kyiv on Monday after talks with the President of Ukraine Vladimir Zelensky. On Tuesday, Scholz will meet Russian President Vladimir Putin in Moscow. In recent months, relations between Russia and the West have been dominated by the situation around Ukraine and security in Europe: Moscow sees a threat in NATO’s further eastward expansion and demands written security guarantees from the North Atlantic Alliance. The US and Europe, in turn, refuse to succumb to the Kremlin’s pressure, but the parties do not leave hope of negotiating. Yesterday at a press conference, Scholz said that the issue of Ukraine’s accession to NATO is not yet on the agenda and was surprised that Russia is raising it. However, Zelensky said that Ukraine still wants to join the North Atlantic Alliance, seeing this as its way. On Monday, Kremlin spokesman Dmitry Peskov told reporters that Ukraine’s refusal to join NATO could help significantly respond to Russia’s security concerns.

The US is closing its embassy in Kyiv, moving diplomatic operations to Lviv. At the same time, the State Department instructs to eliminate network and computer equipment at the facility in Kyiv.

The price of gold reached its highest since November amid US inflation and geopolitical risks.

OPEC head hopes that the situation around Ukraine will be resolved and will not affect the oil market. However, it is clear that the geopolitical situation is already contributing to the rise in oil and natural gas prices. Yesterday, WTI crude futures reached $95 a barrel for the first time since 2014, while analysts predict $100 per barrel shortly.

Asian markets mostly decreased yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.32%, Hong Kong’s Hang Seng (HK50) lost 0.52%, but Australia’s S&P/ASX 200 (AU200) added 0.37%.

Economists at Australia’s largest bank, Commonwealth Bank, are forecasting a significant increase in inflation in the country shortly and now expect the Reserve Bank of Australia to start raising interest rates in June rather than in August as previously predicted. In the minutes of the February 1 board meeting, released on Tuesday, the RBA held the line that it intends to be patient before raising the monetary rate for the first time in a decade. Last week, RBA Governor Philip Lowe said that he would like to see a couple more quarterly inflation reports before raising the monetary rate.

Main market quotes:

S&P 500 (F) (US500) 4,401.67 -16.97 (-0.38%)

Dow Jones (US30) 34,566.17 -171.89 (-0.49%)

DAX (DE40) 15,113.97 -311.15 (-2.02%)

FTSE 100 (UK100) 7,531.59 -129.43 (-1.69%)

USD Index 96.35 +0.27 (+0.28%)

• – Japan GDP (q/q) at 01:50 (GMT+2);
• – Australia RBA Meeting Minutes (m/m) at 02:30 (GMT+2);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+2);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+2);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+2);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – US Producer Price Index (m/m) at 15:30 (GMT+2);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+2).

by JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.