Russia-Ukraine Developments Drive Markets Lower
Markets are trading with a broadly risk off tone today following worrying geo-political developments last night. Russian president Vladimir Putin has formally recognised two breakaway territories in Eastern Ukraine as separate states and has ordered Russian troops into the regions on “peacekeeping” duties. The news comes on the back of weeks of tensions and uncertainty during which time risk assets have bene knocked sharply lower. In response to this development, EU leaders are expected to meet today to determine how to address the situation, with the expectations that fresh sanctions will be applied against Russia.
With Russian troops now in Ukrainian territory, the risk of full military conflict has increased and markets are watching nervously this week. The move is a disappointing turn of events following news yesterday that Biden and Putin had agreed in principle to holding a summit aimed at avoiding war. However, with Biden’s insistence that such talks could only happen if Russia had not invaded Ukraine, it is unclear now whether those talks will still go ahead.
Looking ahead, very little of note on the data sheet this week. US core PCE on Friday is expected to confirm the ongoing inflationary rise. We have some Fed speakers due later today. However, the main focus is likely to remain on the Russia-Ukraine situation with markets vulnerable to downside shocks on any negative news flow.
Technical Views
DAX
The rejection at the latest retest of the broken bullish trend line has seen the market turning heavily lower. Price has since broken below the 1479.27 level but has found fresh support on approach to the 14170.79 level. With both MACD and RSI bearish here, the focus is on a further push lower while price holds below the 14791.27 level.
S&P 500
The failure at the 4575.50 level has seen the market trading back down to test the 4221.25 level support. With big bullish divergence on momentum studies, we might see a double bottom formation here, suggesting room for a rebound higher. However, if price breaks below the 4221.25 level, the focus is on 4062.25 next.
FTSE
The failure at the 7691.6 level has seen the market reversing back inside the broken bull channel, with price having recently traded as low as the 7362.6 level, which holds as support for now. With indicators both bearish, focus is on a test of deeper support at the 7241 level next unless bulls can reclaim the 7558.7 handle.
NIKKEI
The Nikkei’s attempt to break back above the broken triangle bottom and 27422.9 level failed at first pass. However, with price currently holding a test of 26246 support and with strong bullish divergence at the level, we might be seeing a double bottom set up, suggesting room for another attempt at a rebound higher.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.