Investors Try to Stay Optimistic on Wednesday
23 February 2022
A dip-buying approach was seen in the markets on Tuesday and Wednesday as market participants hoped that the worst might be over in the Ukraine/Russia crisis.
The US and EU announced fresh sanctions on Russia, although they seem to be not as aggressive as the market had feared.
A senior US State Department official said the sanctions are to punish Russia's economy but are not intended to hit energy markets.
US Secretary of State Antony Blinken canceled a meeting with Russian Foreign Minister Sergei Lavrov planned for Thursday but added he would do anything he could "to avert an even worst-case scenario, an all-out assault on all of Ukraine, including its capital."
There is no significant macro news in the calendar today; thus all focus will likely remain on any information coming from Ukraine or Russia.
Stock markets are trying to erase Monday's losses, with the German DAX already correcting more than 50% of that decline. US benchmarks are also somewhat bullish as indices are forming double bottom patterns on daily charts.
On the other hand, the improving situation in Eastern Europe is putting pressure on US yields as markets are back in pricing more and more rate hikes. As a result, the 2-year yield rose to new cycle highs above 1.62% today, while the 10-year yield approached the 2% threshold again.
From other news, gold hit a strong resistance in the 1,900 USD zone. However, with rising yields and possibly improving situation in Ukraine, we might see some profit-taking, likely dragging the metal toward 1,870 USD as the first significant support.