Global markets were broadly stable today, on track to end the week broadly higher as confidence returned to risk assets. Investors, hooked on Yellen’s comment of a rates rise “about six months” after the end of tapering were left struggling to decide on market direction earlier in the session as European equities started off strong before pulling back towards the open after which they subsequently pushed higher again, aping market conditions which have dominated what has been a volatile week for gold, crude oil and major stock indices.
Sanctions against Russia kept investors on their toes today, with many unwilling to commit large positions ahead of further clarity. The risk premium saw spot gold prices snap a four session losing streak as prices rebounded above $1,335/oz while front month Brent prices pushed past $107.50/bbl, rising for the second straight session.
Market participants are hopeful that further details regarding Fed policy will be gleaned from Fed officials due to speak later today, although caution prevailed as the dollar index pulled back to a low of 80.034. Wall Street opened on the front foot with both the S&P 500 and DJIA trading between 0.5-0.7% higher, on track to post weekly gains.
For the coming week there’s plenty to keep participants engaged. We expect geopolitical risk to support commodity and energy prices higher as tensions show now sign of easing between Russia and Ukraine and economic sanctions bite. On the macroeconomic front, Chinese flash manufacturing PMI due out early on Monday will be eagerly anticipated. Investors expect a slight improvement in March to 48.7 from 48.5 the previous month and any positive surprise will help alleviate concerns that demand growth is slowing.