Daily Market Commentary 5th April 2022

Global equity markets edged out slight gains to open the new week, pre-occupied with the Ukrainian war rather than the economic drama unfolding. European markets are suffering extreme inflationary pressures, as the Netherlands revealed an inflation rate of 11.95, following he Spanish 9,85 and Germany’s record high of 7.5%. The energy crises is soon to spread to a food crises, created by US and European sanctions on Russia, which have boomeranged. Europe has been forced to pay in Russian roubles, for their essential gas supplies and his will spread to agriculture, minerals, metals and fertilisers. The runaway inflation will drive higher interest rates and eventually force the removal of monetary welfare, in the form of QE.

The US bond yield curve continues to invert, sending flashing recession signals to markets, which should spook Central Bankers and politicians alike. European political leaders are looking a imposing further suicidal and crippling economic sanctions upon Russia, which sparked the EUR to fall back to 1.0950, while he GBP plunged to 1.below 1.3100.

Commodity  prices remain extremely high and only looking to go higher, as sanctions escalate. This has boosted the associated currencies, with the NZD regaining 0.6950, while the AUD pushed back up to 0.7540. The Ukrainian crises and the fallout, in terms of the energy and food crises gripping Europe, will continue to unfold. Inflation and interest rates will dominate market reactions and results.