US equity markets continued to rally strongly again overnight, despite the Fed and Bank of England both raising rates and the Ukraine war rolling on. The Ukraine and Russia remain in peace negotiations and that has driven the positive sentiment in the markets, along with the Fed acting in line with expectations and leaving QE in place. The global share markets have acted inversely, ‘sell the rumour, buy the fact’. US equities have seen big gains, while commodity pricing was softer, due to demand fears following lock-downs in China. The US Dollar has tumbled following the Fed’s rate decision, with the EUR surging to 1.1150, while the GBP rallied to 1.3160. The Bank of England also raised rates, for the third time in succession, while warning of even greater inflationary pressures from the fallout attributed to the Ukraine conflict.
The rising interest rate environment and Ukraine peace negotiations have improved risk sentiment and strong commodity prices have supported the associated currencies. The flagging reserve allowed the NZD to bounce back to 0.6880, while strong Australian employment data assisted the AUD, which surged to 0.7380.
Global sentiment has been on the improve, but there are many, many red flags out there, along with the odd ‘Black Swan’ floating around.