US Friday close:
- The Dow Jones fell -201.94 points (-0.58%) to close at 34,552.99
- The S&P 500 fell -1.94 points (-0.05%) to close at 4,461.18
- The Nasdaq 100 fell -43.991 points (-0.31%) to close at 14,376.09
- Australia’s ASX 200 index closed at 7,278.50 on Friday
- Japan's Nikkei 225 index closed at 26,827.43 on Friday
- Hong Kong's Hang Seng index closed at 21,221.34 on Friday
- China'sA50 Index closed at 13,725.45 on Friday
European Friday close:
- UK's FTSE 100 index rose 37.66 points (0.51%) to close at 7442.39
- Europe's Euro STOXX 50 index fell -20.64 points (-0.53%) to close at 3881.8
- Germany's DAX index fell -86.12 points (-0.6%) to close at 14326.97
- France's CAC 40 index fell -37.91 points (-0.57%) to close at 6582.33
The Pentagon says there is “clear evidence that Russian forces are committing war crimes” and accused the Kremlin of indiscriminate attacks within Ukraine. However, whilst the Pentagon will continue to help collect evidence of such crimes they also said it is not up to them as to what will come of it. In response, Russia has told the US that relations between the two are ‘on the verge of collapse’.
The US state department also confirmed a meeting between US and Russian ambassadors took place, where the US demanded Moscow follows international law. A NATO official has warned that Belarus may soon attack Ukraine, and that Belarus are potentially preparing to let Russia place nuclear weapons in their country.
Headlines overnight were enough to take the steam out of Wall Street’s rally, but not enough to turn the tide with the S&P 500 effectively flat at -0.4% lower and the Nasdaq closing just -0.3% lower.
Commodities rise with geopolitical tensions
Overall, commodities rose in tandem. The Thomson Reuters commodities index rose 2.5% and closed just below 300, less than a day’s trade from its 7-year high. But notable gains were seen on oil prices as European officials continued to bicker over how to deal with a Russian oil embargo. Germany’s claim to remain dependant on Russia’s energy markets, whilst another EU diplomat thing Europe could have replaced Russia’s exports by June. But whilst EU’s foreign ministers may not be on the same page regarding banning Russian oil imports, the pressure is on to do so, given the war-crime status Putin has now earned via Russia’s attack on civilians.
WTI closed above $110 and near its high of the day. Technically it is headed into several historical highs between 110.23 – 114.83 but, if the geopolitical landscape continues to heat up then such levels likely account for little.
Gold is holding above the June high around 1916 although failed to recapture losses sustained on Friday as it is caught between the safe-haven flows and threat of hawkish Fed. Silver was also higher overnight yet remains below 25.54, a break above which invalidated out near-term, bearish bias and a break beneath Friday’s low confirms it.
Due to the rise in energy and materials stocks overnight, the ASX 200 is expected to open higher today. But we need to see a break above 7360 to assume bullish continuation, and even then 7400 is likely to provide resistance. Therefore, we would be keen to explore a break of yesterday’s low should the opportunity arise, to mark a countertrend move. We have now seen three bearish hammers around 7340 which makes it a pivotal level (and one for bears to watch whilst prices remain below it).
ASX 200: 7278.5 (-0.22%), 21 March 2022
- Info Tech (2.46%) was the strongest sector and Industrials (-1.24%) was the weakest
- 5 out of the 11 sectors closed higher
- 6 out of the 11 sectors closed lower
- 6 out of the 11 sectors outperformed the index
- 81 (40.50%) stocks advanced, 101 (50.50%) stocks declined
- +5.42% - Liontown Resources Ltd (LTR.AX)
- +4.1% - Hyperion Global Growth Companies Class A (HYGG.AX)
- +4.06% - EBOS Group Ltd (EBO.AX)
- -4.32% - Magellan Financial Group Ltd (MFG.AX)
- -3.73% - Atlas Arteria Group (ALX.AX)
- -3.57% - Imugene Ltd (IMU.AX)
Read our ASX 200 trading guide
Fed to raise more aggressively if required
Jerome Powell left little to interpret by saying the Fed must move “expeditiously” and potentially raise rates “more aggressively” to prevent inflation becoming entrenched at high levels. Citing a strong labour market alongside high inflation which is “much too high” it could reignite calls for a 50-bps hike in future meetings. Currently there a 59.4% chance of a 25-bps hike at their next meeting, up from 43.9% from Friday.
The US dollar index and USD/JPY rose 0.25%, AUD/USD and NZD/USD pulled back from their highs despite the rise in commodity prices. The US 10-year yielded 2.3% overnight for the first time since May 2019.
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