WEEK AHEAD: FEB 28

Short Description

Market Crash: Russia invades Ukraine

Video Script

Oil has just hit $100 per barrel for the first time in 8 years. It’s a massive bull market that just refuses to top out but will there be profit-taking at the big number or does war in Ukraine mean there’s further to go? I analyse oil, gold and forex markets and rundown this week’s economic calendar. Stay tuned!

 

Hey guys, I’m Rich and a very warm welcome to the week ahead, where I analyse price trends and preview upcoming market events.

 

Oil prices really are exploding higher now. It’s looked odds-on for a while now that oil would hit $100 per barrel and this week it happened. I’m sure you know by now it was triggered by the Russian invasion of Ukraine. But why exactly?

Russia is the world's second-largest producer of crude oil and the world's number one producer of natural gas. Major gas pipelines go through Ukraine to Europe carrying roughly half of Russia's gas supply to the Union. If the conflict escalates, it will likely become logistically impossible to keep those gas pipelines running, further increasing the demand for alternative fuels i.e. crude oil, possibly pushing the price of crude even higher.

However, uncertainty about Russia’s invasion is keeping investors away from making risky trades and into haven assets, which might limit some of the upside in oil. Gold, which is the ultimate haven, has jumped over $1950 per oz - and is pushing up towards the $2000 mark I discussed in last week’s video. Stocks on the other hand are plummeting with the Dow Jones, S&P 500 and DAX indices all in correction territories  - down 10% from their highs. In the forex market, traders are turning to the traditional haven currencies including the Japanese yen, Swiss franc and the US dollar.

OK, before I turn to the economic calendar – let me note what’s coming next in the Q4 earnings season. Apple holds its annual shareholder meeting, while Broadcom, Salesforce, CostCo and Target report fourth quarter results in the US. While in the rest of the world Bayer, Baidu and Domino's Pizza report Q4 earnings.

 

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So let’s round things off with the economic calendar. So we have two major central bank meetings. The RBA is first and will likely just reiterate the new hawkish stance it took at the last meeting but analysts seem to think no extra guidance on the first rate hike will come just yet. If there were, it should be bullish the Aussie dollar. The Bank of Canada is the other one. The trucker protests in Canada have been all over the news but likely won’t deter the BOC from its planned tightening. No change in policy is expected but a surprise hike can’t be ruled out.

 

With oil over $100 - this week’s OPEC meeting will be all-important. Increased production quotas might help slow the oil uptrend but OPEC might opt to not be so reactive to the high oil price that generally favours most OPEC nations. Of course we round the week off with non-farm payrolls. 400K extra jobs are expected to have been created in February, slightly down from the big positive surprise of 467K in January. Another solid report would help quell fears of stagflation after US CPI rose over 7.5%.

 

Right thanks everyone, good luck trading this week and make sure to click on subscribe so you don’t miss the next episode of the week ahead.