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Daily Wrap Up 30 March 2022

30 Mar 2022 04:31 PM

Stocks fall as Russia reneges on pledge

The optimism of yesterday has been replaced by renewed pessimism as continued Russian aggression is driving European stock markets lower. Yesterday, face to face talks were held between Russian and Ukrainian politicians, and Russia pledged to ease up on military action around Kyiv and Chernihiv, but it was reported there has not been any let up in the violence surrounding Chernihiv. This time yesterday there was a sense of hope as some people started to think there might be a ceasefire in the weeks ahead, but headlines about continued levels of military action from the Russian side have dashed those aspirations. Stock markets in continental Europe are bearing the brunt of the violence as the DAX, and the CAC are down over 1%. London’s FTSE 100 is showing a small gain as the rise in mining and oil stocks are helping the British market stay in positive territory. BHP Group and Shell are both up 4%. Seeing as the US economy is geographically and economically separated from the war in Eastern Europe, the sell-off is relatively small, the S&P 500 is down 0.4%.

The latest ADP employment report showed that 455,00 jobs were added this month, and that was marginally ahead of the 450,000 forecast. In addition to that, February’s report was revised up to 486,000, from 475,000. Traders are looking ahead to Friday’s US non-farm payrolls report. Keep in mind the last update was well received. There is speculation the Federal Reserve might hike interest rates by 0.5% in May. Fed Member, Thomas Barkin, said he is open to the idea of hiking by 50 basis points, should it be required.

EUR/USD is rallying again even though things have not progressed in Ukraine. Yesterday, the euro jumped on the news that Russia would reduce military operations around certain cities in Ukraine, but despite the apparent breaking of that promise, the single currency is enjoying a rally against most currencies. Interestingly, EUR/CHF and EUR/JPY are lower, which suggests there is an element of risk-off attitude in circulation. The jump in gold and silver also indicates there is a preference to hold assets that are lower risk. Bargain hunters were quick to swoop in and purchase the precious metals following their large losses yesterday.

WTI and Brent crude were already moving higher throughout the session as they bounced back from the painful losses they endured yesterday – when sentiment surrounding Ukraine improved slightly. Oil rallied further today as the EIA report showed that US oil stockpiles fell by 3.44 million barrels, a much bigger decline than expected.

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