Markets are bracing for the risks ahead, with tighter monetary policy and Biden vowing to tackle China over Taiwan, triggering a fresh wave of risk aversion sentiment.
Risk aversion sentiment sets in as central banks brace for another round of rate hikes
“US markets joined their European counterparts in the red today, with a late start to the week in the UK bringing a new two-week low for the FTSE 100. a relatively bullish day, that never really started as selling pressure set in ahead of a week full of monetary tightening and warnings of stubbornly high inflation. hawkish rhetoric from the FOMC (Wednesday) and Bank of England (Thursday) leaves little room for optimism, with Sweden’s central bank leading the way after raising rates by a full percentage point today Instead, traders reverted to type, with stocks heading lower as the dollar regains momentum.”
Little room for optimism as stakes rise in Taiwan and Ukraine
“Russia today outlined plans to quickly annex four Russian-backed regions of Ukraine, with referendums expected to take place over the coming week. While optimists can point to the potential for a rebound massive market share should Russia pull back and reach a peace deal, this move to formalize their military gains will make the task of resolving this conflict even more difficult.Meanwhile, Joe Biden issued a statement bold in swearing that US forces would defend Taiwan against any Chinese attack, traders fearing that any US-China conflict could have economic consequences far beyond those seen in the past year.