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MTrading Team • 2022-03-16

Risk appetite improves on China, Ukraine news amid pre-Fed anxiety, BTC prints relief rally

Risk appetite improves on China, Ukraine news amid pre-Fed anxiety, BTC prints relief rally

Be it Wall Street’s upbeat close or ebbing covid fears from China, not to forget a rally in technology shares, global markets witnessed a brighter day ahead of the Federal Open Market Committee (FOMC) meeting.

The risk-on mood joined softer US Treasury yields to weigh on the US dollar and triggered a rebound of gold and crude oil, which in turn helped Antipodeans. That said, Brent Oil rises 2.30% daily but the weekly losses are still above 10.0% by the press time. 

Talking about equities, Nasdaq, Euro Stoxx 50 and DAX all posted over 2.0% daily gains whereas FTSE 100 rises around 1.0% at the latest. In Asia-Pacific markets, Hang Sang rallied over 9.0% while China’s tech shares helped benchmarks to print near 4.0% daily gains. Further, Nikkei 225 and ASX 200 also managed to portray gains above 1.0%.

Elsewhere, cryptocurrencies also witnessed a relief rally on softer USD and news that Instagram will add NFTs.

The below mentioned are detailed performances of the key financial assets on March 16:

  • BRENT OIL prices increase 2.14% to bounce off a fortnight low to regain $100.00 level.
  • GOLD gains around 0.20% while defending $1,900, around $1,920 rate of late.
  • USD INDEX declines for the second consecutive day, down 0.27% around 98.70.
  • DOW JONES regained upside momentum by closing at 35,544.34, up 1.82%.
  • NASDAQ rallied 2.92% while closing the day at 12,948.62
  • DAX rises 2.34% reaching 14,290 rate.
  • FTSE 100 adds 1.15% to print the 7,264.66 rate.
  • BTC/USD advances 3.25% to $40,578.
  • ETH/USD rises for the third consecutive day to $2,690, up 2.75%.

China backs Wall Street-led optimism despite sluggish yields, no major data

The risk-on mood initially took clues from softer oil prices and a retreat in the US Treasury yields during Tuesday’s US session that flashed nearly 3.0% gains of tech-heavy Nasdaq. 

The market optimism then relied on Ukraine’s optimism from the ongoing peace talks and softer COVID-19 daily infections from China. Also supporting the upbeat mood are improvements in Japan’s Industrial Production numbers and manufacturers’ optimism, as signaled by the Reuters Tankan survey. Additionally, Chinese policymakers’ readiness to defend economic growth also favored market mood in the Asia-Pacific zone.

European equities offer little surprise and followed their predecessors, despite uncertainty on how the Ukraine crisis will affect the bloc.

The risk-on mood weighs on the USD ahead of the Fed’s verdict, which in turn favors prices of gold and crude oil. Energy markets also tracked relief from China and OPEC/IEA comments to snap a two-day downtrend.

BTC and ETH ignore a slump in whale transactions to a one-year low while SHIB benefits from community burn.

All eyes on Fed, but not for the rate hike

Market sentiment may continue to remain positive for the rest of the day, despite the Fed’s widely anticipated 0.25% rate-hike, if the FOMC emphasizes less on the faster tightening and balance-sheet normalization. The dot-plot and speech from Chairman Jerome Powell are important too.

In a surprising case of a 0.50% rate hike and signals for more, the US Treasury yields would renew the multi-month high flashed earlier the week and could weigh on US equities, as well as commodities.

Other than the Fed, China’s covid updates and progress of the Moscow-Kyiv peace talks also become important to watch for clear directions.

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