Daily Market Commentary 28th February 2023

European and US equities stabilised, to open the trading week, following the heavy losses suffered last week. The rising global bond yields, driven by hotter than expected inflation readings, are the source of the problem. The Fed’s favoured measure of inflation, the PCE, was hotter than expected, when released last Friday. This is driving bond yields higher, supporting a stronger US Dollar and forcing share prices lower. European markets will be watching a slew of inflation readings this coming week, which will only serve to reinforce the ECB’s signalled 50 basis point rise in interest rates. The EUR is trading below 1.0600, while the Yen has weakened to 136.25.

Commodity currencies are under pressure from the stronger reserve, with the AUD falling to 0.6700, while the NZD dropped to 0.6130. Local markets will watch the NZ Business Confidence number, released today, but expectations are not high. Attention will turn to the European inflation numbers and their impact on markets.