Market midday briefing

Midday Update

Just as buyers started coping with fears around Russia and Ukraine tensions the Beijing municipal health commission is out saying that the cases have been found in several districts and warns of a complicated situation in terms of epidemic prevention and control.

Ukraine’s fear is the big market mover today, just look at oil price as they move towards $90.00 after easily taking out last year’s high of $85.40. This means the market is expecting a potential oil glut.

With Russia deploying 100,000 troops on the Ukraine border, prompting global leaders to intervene in Russia’s invasion attempt. The U.S. Secretary of State Antony Blinken will arrive in Europe today to discuss the matter.

If we look at the moves in stocks as proxy for market sentiment, the European stocks declines are starting to ease. However, with Omicron fears and Ukraine, how long can that realistically last.

Without a doubt the big story this week and arguably the big story so far this year is 10-year bond yields. 10-year Treasury yields are finding another leg higher today, jumping to a high of 1.90% – the highest in two years – as we see yields return back to pre-pandemic levels.

FX markets are pretty much unchanged on the day, with the EURUSD and GBPUSD slightly recovered. The Bank of England Governor is speaking later today, so the pound is probably consolidating ahead of the event.

The AUDUSD and AUDJPY pairs, again classic risk proxy’s are edging higher on the day. We should keep a close eye on both if stocks start to decline or rise on the day.

Personally, I think silver is a great instrument to watch. Silver went crazy yesterday in a brief period of 15-minutes and rallied towards the $23.50 area after testing $22.80. Bulls are now probing towards the $23.50 level.

Looking at tech stocks, a strong emphasis is going to be on Microsoft after Bill Gates splashed out on a big purchase yesterday. Meme stocks are also under focus after yesterday’s drubbing.

Kathy Wood’s ARK Invest has been getting hammered recently, and if you put a chart of Bitcoin next to ARK Invest the two are very similar. If we continue to see cryptos moving lower ARK Invest is likely to suffer further.

Day Ahead

Later today traders look to Consumer Price Inflation data from the Canadian economy. The USDCAD pair has been particularly strong due to oil price trading around current levels. This could be a market mover.

As mentioned early, Bank of England Governor Bailey is set to speak. Due to the expectations and sensitivity around interest rates do keep a close eye on this key speak. The FTSE100 and pound could move.