ECB needs to normalise policy50 bps rate hike should not be excluded if data in next few months suggests that inflation is broadeningHe may be a hawk at heart but I think a 50 bps rate move would be a bit much, on the balance of things. I mean, this would mark the first rate hike by the ECB in over a decade. That pretty much tells you how set in stone their policy settings have been, so forgive me if I don’t quite buy such a stark shift in mentality.

The devastating events of the past few
months have put the financial markets in a tight spot with tremendous global
effects. As a trader, you have probably witnessed the impact of these events
when it comes to your daily investments. Almost every asset class of the markets have
endured shockwaves, making traders unsure of their next move.

While we cannot possibly predict the
final outcome of this global crisis, our team at XPro Markets has looked
back and made some fundamental conclusions to help you gain a better
understanding of what is happening.

So, let’s take a look at some of the
most noticeable changes in the markets.

The
focus of attention

Since the mid-1950s, oil has been the
world’s most important source of energy. As of 2014, oil and gas accounted for
over 60% of Russia’s exports and over 30% of the country’s GDP. The rising
tensions between Russia and Ukraine have spiked oil and gas to new record
highs.

Among the assets most heavily
influenced is Brent Crude Oil, after it shattered through the $100/barrel
threshold in March. The sanctions imposed on Russia and avoidance of Russian
oil by buyers have already led to a drop in output, raising concerns about
further losses in the future.

However, recent updates regarding the
new lockdowns in China have sparked fears about declining demand for oil from
China, the world’s biggest crude importer. This influenced Crude Oil, making it
drop below 100$.

A
safe-haven surge

Due to the uncertainty of these
challenging events, people are seeking to trust their funds in safe-havens,
such as precious metals, Gold, and Silver. Despite their high volatility, these
assets still appear to be among the most popular options for traders.

As a traditional safe-haven asset, gold
has historically provided protection during severe equity market declines and
financial turmoil. Consequently, traders tend to turn their backs on riskier
asset classes such as stocks and cryptos.

Inflation
on the rise

Inflation refers to the gradual
increase in the prices of goods and services over time. This essentially means
that a dollar bill cannot buy you as much as it did in the past. What causes
inflation usually has to do with increased consumer demand or increases in
production costs.

The Consumer Price Index (CPI), which
tracks data on 80,000 products such as food, energy, medical care, and fuel, is
one of the most closely monitored factors of inflation in the US.

Russian and Ukrainian exports account
for about 20% of the world’s corn and 25% of the world’s wheat, which is
driving up prices for a number of agricultural commodities. Therefore, the
conflict in Eastern Europe could enhance the market’s current preferences,
including a preference for value names over growth stocks.

What
can you do?

As you already know, online trading
always comes alongside the risk of losing. Due to the constantly fluctuating
prices, you can never be certain of your trading decisions. Especially during a
global crisis like the current Russia-Ukraine conflict, it is essential for
traders and investors to keep up to date with every economic event that could
affect their investments.

For this reason, prioritize your market updates and trading knowledge with XPro Markets’
educational tools and resources.

OPEC+ compliance with its oil output cuts rose to 220% in April, up from 157% in March. That comes despite the easing of its output caps in recent months. Of note, the bloc’s production was seen 2.6 mil bpd below the required level in April with Russia producing 1.28 mil bpd below its own required level last month.Yup. In other words, don’t expect much help from OPEC+ in trying to balance out the supply side of the equation.

The European Union and the United States agreed on Monday to cooperate more closely to counter disrupted supply of industrial commodities and food caused by Russia’s invasion of Ukraine and to combat disinformation from Moscow.Headlines:EU, U.S. AGREE TO COOPERATE ON SUPPLY CHAIN RUPTURES FROM RUSSIA’S INVASION OF UKRAINEEU, U.S. AGREE TO COMBAT RUSSIAN DISINFORMATION IN THIRD COUNTRIES EU, U.S. AGREE TO COOPERATE ON TRANSPARENCY AND MONITORING OF VALUE CHAINS TO EASE SEMICONDUCTOR SHORTAGESEU, U.S. AGREE TO INFORMATION-SHARING ON SUBSIDIES TO SEMICONDUCTOR SECTORS

Not for the first time, The Hungary are making it clear to the EU what their ‚Red-Lines‘ are for EU sanctions on Russian OilHUNGARY FOREIGN MINISTER SAYS BUT WE HAVE MADE IT CLEAR THERE WAS A RED LINE IN SANCTIONSSAYS IT HAS BEEN CLEAR TO EU WHAT HUNGARY’S STANCE ON OIL SANCTIONS IS FOR WEEKSSAYS RUSSIAN OIL SHIPMENTS VIA PIPELINES SHOULD BE EXEMPTED FROM PROPOSED SANCTIONSSAYS IF PIPELINE SIPMENTS ARE EXEMPTED HUNGARY CAN „LIVE WITH“ THIS CURRENT EU SANCTIONS PACKAGEHUNGARY FOREIGN MINISTER SAYS WE HAVE NOT RECEIVED ANY SERIOUS NEW PROPOSAL FROM THE EU ON SANCTIONS SINCE COMMISSION PRESIDENT’S RECENT VISIT TO BUDAPEST

Newsquawk’s US Market Open: Mixed trade amid conflicting China drivers & multiple geopolitical updatesFull NoteEuropean bourses are mixed, Euro Stoxx 50 -0.6%, following a similar APAC session with impetus from Shanghai’s reopening offset by activity data and geopoliticsStateside, futures are lower across the board, ES -0.4%, with the NQ marginally lagging as yields lift; Fed’s Williams due later before Powell on TuesdaySweden & Finland are moving forward with NATO bids, with Russia pushing back against this; no progress expected today on the EU’s 6th sanctions packageEUR lifted amid commentary from Villeroy on the currency, with the DXY outpacing peers but lower overall amid the Single Currencies weightEGBs slip on Villeroy, periphery hit further with the China data weighing while USTs are contained and the curve marginally flatterWTI and Brent are pressured and torn between the aforementioned China factors amid geopolitical risk/news; Wheat bolstered by India’s export banLooking ahead, highlights include NY Fed Manufacturing, Speeches from Fed’s Williams, BoE’s Bailey, Ramsden, Haskel & Saunders

The global fiscal recovery in 2021 that followed the Covid-19 shock of 2020 has slowed sharply, affected by higher commodity prices, rising inflation more generally, increased borrowing costs, slowing real GDP growth and the war in Ukraine, says Fitch Ratings.FITCH RATINGS SAYS GLOBAL FISCAL RECOVERY TO SLOW IN 2022 AND 2023

FITCH SAYS GLOBAL FISCAL RECOVERY IN 2021 THAT FOLLOWED COVID-19 SHOCK SLOWED SHARPLY, AFFECTED BY HIGHER COMMODITY PRICES, RISING INFLATION, AMONG OTHERS

FITCH SAYS GLOBAL FISCAL RECOVERY IN 2021 WILL BE AFFECTED BY INCREASED BORROWING COSTS, SLOWING REAL GDP GROWTH AND WAR IN UKRAINE

FITCH SAYS POLICY INTEREST RATES ARE RISING, AND FITCH BELIEVES THIS MARKS AN END TO ERA OF VERY LOW GOVERNMENT BORROWING COSTSFull Note

EC Cuts 2023 Euro Zone Economic Growth Forecast to 2.3% From 2.7% Seen in FebInflation, which the European Central Bank wants to keep at 2.0% will be 6.1% this year, the Commission forecast and fall only to 2.7% next year. Before the war, the Commission expected prices to grow 3.5% in 2022 and 1.7% in 2023.The forecast is the first comprehensive estimate of the economic cost of the war in Ukraine for the 19 countries sharing the euro and the wider 27 nation EUThe stagflation vibes continue

A weekend report of comments from a „top official“ in Iran. Bloomberg (gated) carry the report, citing  Mohsen Khojastehmehr, managing director of the National Iranian Oil
Co.. he spoke with reporters Saturday in Tehran.

Iran has capacity to double oil exports if there’s sufficient demand

Iran will “exert maximum effort to recoup its crude oil market
share and revive its customers,”

Iranian crude exports have plunged ever since previous US President Trump dumped the Iran nuclear deal in 2018. Talks between the European Union and Iran on attempts to revive the deal are ongoing. I’ve been updating on the negotiations for months and months but they are persistently stalemated. We get positive and negative indications on the talks on a seemingly never-ending cycle. Resuscitation of the deal, if it comes, will eventually bring more Iranian oil to market, over time. 

Oil price update – trading resumes Monday morning Asia time/Sunday evening US time:

Friday report on a Barclays note eyeing EUR/USD under 1.00. Not that’s 1.00 is too far away!
„If Russia closes its gas taps (to Europe), we expect EURUSD to fall below parity,“ 

„Our economists estimate that a total loss of Russian supplies, combined with rationing of the remainder, could dent euro area GDP by more than 5 percentage points over one year“.
The heightened concern over supply of Russian gas into Europe has been ongoing for weeks/months since Russia launched its invasion of Ukraine. As for euro, its been heavy all year with monetary policy divergence between a tightening Federal Reserve and a much more hesitant European Central Bank also a factor. 
EUR/USD: