The war in Ukraine is taking turns we couldn’t have predicted and sanctions that were seen to be more than enough in 2014 have been trounced by the latest global sanctions and sentiment towards Russia. As sanctions are disrupting supply chains and different commodity producers are trading at different prices depending on whether you are a Russian company and discounting or a London-based metals trader and running out of physical supply, the volatility in the markets is growing.
Market Wrap
As a result of the Biden administration's decision to stop importing Russian gas and oil, stock markets in the US ripped after the London close. Investors continued to closely follow the situation in Ukraine, which will turn "ugly" in the upcoming weeks before any chance of it getting better. Over the last week or so, the bears have been in control of the US indices into the closing hours of each trading day. If this rip continues, we may be seeing a change in sentiment. But this is very unlikely. The Nasdaq is currently approaching a key level and where I am expecting to see a bearish turn. 13706 is the nearest imbalance but should momentum get through that level I will wait for a test of the 14235. A break and close above the 14392, would be where my bearish outlook turns more neutral and possibly positive, depending on the underlying market features.
Biden said in a public address that he understands Washington's allies won't follow the US lead since their energy security situation differs significantly from that of the US. The US can be energy independent, but they import different grades of oil from around the globe. "We will keep our NATO commitment," and do our best to stop Russian President Vladimir "Putin's war machine," Biden said.
Kwasi Kwarteng, the U.K.'s energy secretary, announced the UK will phase out Russian oil by the end of the year. "This transition will give the market, businesses, and supply chains more than enough time to replace Russian imports - which make up 8% of UK demand," he explained.
Kwanteng said the UK would work with companies to find alternative suppliers. Additionally, he said that "while the UK is not reliant on Russian natural gas," as it represents 4% of British supply, the government is looking into ending Russian gas imports as well. The North Sea enabled the UK to prosper in the past decades, so I am assuming we will see more development there as well as finding new energy partners. The future is likely to be solar, wind, and nuclear so this could also speed up the de-carbonizing of the globe quicker.
Brent is trading within yesterday’s range and the dynamic support of the H1 50-period EMA could have been a good buy signal.
The EURJPY trade that I pointed out in this morning’s TA video has worked out as planned and is on its way to reach the profit target.
The euro has maintained the most relative strength against the currencies we follow with the UK coming in a close second. The Swiss franc yen and Aussie have all been weaker and would have made for equally good shorts against the euro.
Nickel futures spiked today forcing the LME to halt trading as nickel futures surged to $80,025 per tonne, having topped the $100,000 mark for the first time ever and almost tripling in value in the last 2 sessions. The base metal is used for alloying elements and within batteries and is especially useful in EVs. The metals, both base and precious, are trading higher but the move in nickel was immense.
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