Reflecting mounting concerns over a full-scale Russian invasion of Ukraine following news reports this afternoon Putin has authorised special military operations in Ukraine’s Donbass, US equity futures have plunged through year-to-date lows. Elsewhere the Australian stock market has tumbled 3% to below 7000 for the first time since February 1.
In this article, we provide a quick take of where 4 key markets might trade to, should Russia invade all of Ukraine but with no NATO Military involvement. (the U.S has already said U.S. forces would not go into Ukraine). Should NATO troops enter Ukraine, it would exacerbate the moves outlined below.
1. The S&P500
Last week the S&P500 rejected the 200-day moving average at 4450, which reinstated a short-term negative bias. After breaking the late January 4212 low during the Asian session today for fresh year to date lows, the risks are for the sell-off to extend another 5% lower towards wave equality at 4000 to complete a three wave corrective sequence from the 4808 high.
Extrapolating the 5% sell-off in the S&P500 into the ASX200 and bearing in mind the ASX200 is more defensive in nature which suggests it may outperform, the ASX200 has a pullback target of around 6650. The wave equality target is not until 6500. Ahead of both of those support levels and possible targets is the January 6758 low.
Gold has surged above resistance at $1916, and this should be the catalyst to see the move extend towards the next upside target at $1950/65. Beyond here, there is scope for the rally to retest the August 2020, $2075 high.
4. Crude Oil
The combination of a tight market, new sanctions, and the escalation of Russian military activity in the Donbass region should be enough to see crude oil break above the $95.82 high and then above $100 per barrel, towards $102.00 in coming weeks.
Source Tradingview. The figures stated areas of Feb 24, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
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