Markets Respond to Improved Geopolitical Outlook
Global equities in the US and Asia were broadly higher overnight and crude oil spot prices dipped as investors responded to an improved geopolitical outlook.
Peace talks between Russia and Ukraine appeared to make some headway in Istanbul, triggering a burst of volatility in crude oil prices as traders priced in a new supply scenario. If a truce is reached, it would go a long way towards relieving the supply headwinds that sent crude oil prices soaring a month ago.
Additional positive signals from the talks could support market confidence. At the same time, the downside scenario is still in play and any renewed escalation in risks stemming from the conflict in Europe could pressure equities and support safe-haven assets.
In related news, better sentiment towards the EUR may provide support for the Eurozone’s currency but geopolitical risks are still a significant source of concern according to weaker consumer confidence in Germany. ECB President Lagarde’s speech later today may also influence investor sentiment towards the EUR as financial markets are seeking a clearer direction on monetary policy in the world’s largest single trading bloc.
Spot gold and oil prices
Spot gold and oil prices are pointing up in pre-market trading as investors remain wary amid the uncertainty. US indices are looking for higher ground ahead of the vital ADP and NFP numbers this week.
USD and job numbers
The USD may move today during the release of ADP employment figures for March.
Strength in the labour market is seen as a buffer against inflation and rising interest rates, so any disappointment in expectations could slow down USD bulls. Better-than-expected results in the ADP report would likely support the USD, further adding to the strength already gained from safe-haven sentiment.
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