Daily Market Commentary 28th April 2022

The volatility in global equity markets continued overnight, with the rollercoaster ride being fuelled by extreme uncertainty, disruption and instability. The Ukraine war continues to escalate with threats in Moldova and Russia proper. The nuclear option is certainly being mentioned more often, which is an apocalyptic scenario and needs to be avoided at all cost. Russia has cut essential gas supplies to Bulgaria and Poland, due to payment refusal, which has resulted in further rises to already mountainous gas prices. This will only add to pressure on input prices and inflation, while testing supply. The EUR continued to melt-down, crashing to 1.0570, while the GBP plunged to 1.2550.

The US housing market continues to crater, as Pending Home Sales fell 8.2%, while Weekly Mortgage Applications contracted 8.3%. This follows the 8.6% fall in New Home Sales and bodes badly for the US economy, as housing is considered a leading indicator. Australian CPI numbers spiked, as CPI inflation hit 5.1%, from a lowly 3.5%, annualised. This is in line with global inflation and expectations, but still comes as a big shock. The RBA has seen his coming, but has been reluctant to act, due to the political impact and norms, in the lead up to the federal election. The danger is that inflation gets away on them, as has happened in Europe.

The reserve continues to impose downward pressure on commodity currencies, with the AUD testing below 0.7100, while the NZD plunged to 0.6530. The focus remains on inflation and Geo-Political developments.