Jump to content

Invasion of Ukraine: four volatile markets to watch


ArvinIG

314 views

Markets have kicked-off the week nervously as hostilities continue in Ukraine.

1646022440893.jpg
Source: Bloomberg
 
 

Volatility looks likely to persist into the week as hostilities in Ukraine evolve and keep traders on edge. Some rapid-fire developments in recent days have shifted market sentiment. Risk assets fell at Monday’s open due to the latest sanctions on Russia and innuendo from Russian President Vladimir Putin about preparing the country’s nuclear force. Sentiment recovered as reports that diplomatic talks between Ukrainian and Russian authorities have been agreed to and would be held on the Belarusian border. The situation, as it has been from the start, is rapid, dynamic and fluid. Nonetheless, here are four markets to watch as the crisis unfolds.

Oil

The fresh package of sanctions over the weekend has raised the risk of a tit-for-tat trade war between Russia and the West, while the freezing out of Russian financial institutions from SWIFT could slow payments and trade flows for energy. The prospect of further supply disruptions fuelled another surge in oil prices, pushing the price above technical resistance at 95.60. After bouncing off trend line support, the trend for WTI remains skewed to the upside. Although upward momentum is slowing for crude, with the daily RSI showing bearish divergence and price failing to – as yet – make a fresh higher high.

Oil chart
Source: TradingView

The fresh package of sanctions over the weekend has raised the risk of a tit-for-tat trade war between Russia and the West, while the freezing out of Russian financial institutions from SWIFT could slow payments and trade flows for energy. The prospect of further supply disruptions fuelled another surge in oil prices, pushing price above technical resistance at 95.60. After bouncing off trend line support, the trend for WTI remains skewed to the upside. Although upward momentum is slowing for crude, with the daily RSI showing bearish divergence, and price failing to – as yet – make a fresh higher high.

Gold

Gold chart
Source: TradingView

Price action continues to look constructive for gold, with the latest sanctions on Russia announced over the weekend sending price back above $US1900 as traders front-run the flight to gold as big-Russian-money assets are frozen. Despite the jump, sellers have again emerged above technical resistance around $US1910, in large part due to the rip higher in the US Dollar today. That level presents as the key one for gold, which if closed above on the daily charts may open a re-test of $US1960 resistance. On the downside, support can be found at around $US1880.

US Dollar Index

US Dollar Index
Source: TradingView

A run to US Dollar’s, on fears of a liquidity shock to global markets from sanctions on Russian banks and the heightened risk of financial crisis in the county and perhaps across Europe, has pushed the greenback towards higher-highs. FRA-OIS spreads – a measure of Dollar liquidity, or the cost of Dollars – jumped to its highest level since March 2020 today, in an ominous sign for global markets. The US Dollar Index clearly sits in an uptrend, with the next resistance level to watch the index’s recent higher-high at 97.70. Meanwhile, support sits around the 20 and 50 day moving averages, with trendline support currently around 95.70.

NASDAQ

NASDAQ chart
Source: TradingView

Tech stocks have been amongst the most beaten up off the back of the Ukraine-Russia crisis, with the skirmish exacerbating inflation pressures and raising the risks of tighter global monetary policy. Bets for Fed rate hikes have been unwound today. However, the underperformance of growth stocks, as commodity prices fuel a rise in value names, has kept the NASDAW under pressure. We expect the index to open around 2.4% lower tonight. As price continues to expand its broadening formation, key support can be found slight above 13,700 and 13,000. Resistance is around 14,080 and 14,410.

Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.

Kyle Rodda | Market Analyst, Australia
28 February 2022

0 Comments


Recommended Comments

There are no comments to display.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...