Daily Market Commentary 27th April 2022

Global equity markets turned deeply red, again overnight, as the weight of recession hung across markets. The energy crises will soon be joined by a food crises, which is driving cost-of-living and input prices through the roof, leading to runaway inflation. The Ukraine war continues on unabated, with no sign of a peace treaty, as Russia relentlessly takes control. The severe sanctions imposed on Russia will damage their economy, but they remain strong, with low debt and huge budget and trade surpluses. The West’s attempt to destroy the economy through the Central Bank and the currency failed miserably, with the currency now stronger than before the war. In contrast European economies are being smashed by their own sanctions. Energy and input costs have spiralled, leading to rampant inflation and shortages. This is also reflected in the currencies, with the EUR collapsing to 1.0640, while the GBP has crashed below 1.2600.

The Chinese elimination strategy on COVID, is having a devastating impact on the population and fears of a supply chain breakdown grow stronger every day. The impact on demand for commodities is beginning to manifest in demand and price. This has directly impacted the associated currencies, with the AUD falling to 0.7140, while the NZD dropped to 0.6570.

Geo-Political issues are driving equity markets lower and inflation is driving interest rates higher, along with the prospects of global recession.