US armies in Poland, Putin mentioned about nuclear power
According to the Reuters report, the United States sent 3,000 additional troops to Poland while Russia held military exercises in Belarus and the Black Sea following the buildup of its forces near Ukraine. While Russia increased its soldiers` numbers around Ukrainian borders, last night Ukrainian ambassador in the UK told that they are ready to withdraw their application to join NATO to decrease the tensions levels. According to the different media reports, the United States calling its citizens to evacuate Ukraine and many believe that it appears to be spreading panic and has even weakened international efforts for peace. In a press conference with Emmanuel Macron, Putin referred to Russia`s nuclear power and stressed that the war will not have a winner!
Markets and investors are so worried about ongoing tensions, mostly because Russia is the world`s major energy supplier with 35% and 21% global market share for oil and gas exports, respectively. Tensions ended with another sharp increase in global energy prices. US crude oil hit a new seven-year high above $93 per barrel, while Gas price also sharply jumped above $4 as the new week`s trades started.
These tensions also increase the market risk and sent the VIX above 28. With increasing market risk, the gold`s safe-haven demand rose strongly by more than 2% on Friday, to hit a new record high this year, closing at $1,861 per ounce. Even if it is now decreasing a bit, however, it is still in a clear uptrend.
On the other markets, US bond yields fell to 1.95% from a 2.5-year high above 2%. And while last Friday USA500 closed down 1.75% at 4425, ND100 closed down 3% to 14264, and DJI lost 1.26% to close at 34794, today in the future markets they are regaining some of their loss with 0.3% on average. However, in Asian markets, we can see the negative reaction of markets to the news with more than 2% loss in Nikkei 225, 1.3% loss of Hang Seng, and 0.7% loss of Shanghai Index.
On top of the Russia-Ukraine conflict, the Fed`s FOMC will also be in the focus of the market participants. While the US annual CPI without seasonal adjustment in January hit a new 40-year high at 7.5%, and the monthly rate of CPI after seasonal adjustment increased by 0.6% (Same as December), now some market participants waiting to see some fast reaction from FOMC members. The timing of this meeting increased the doubts and guess about the possibility of another rate hike, though the event seemed routine. Anyway, all these talks and guesses tamped down with no change in the FED bond-buying schedule for the coming month, especially with knowing that the central bank has repeatedly said it would only hike after its buying had ceased.
