Markets Take a Breather

Markets take a breather

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At the close of business last Friday, global equities struggled to advance this past week. The price of a barrel of West Texas Intermediate crude oil rose to $113.47 from $103.00 last Friday. The yield on the US 10-year note rose to 2.48%, its highest level since May 2019, following US Federal Reserve Chairman Jerome Powell’s remarks on inflation. Volatility, as measured by the Cboe Volatility Index (VIX), fell to 20.81 from 23.87 a week ago.



COVID sub-variant cases surging
While war rages in Ukraine, little attention is being paid to surging COVID-19 cases across Europe that are also filtering out to the rest of the world. The rise in cases across the continent, from the UK and France to Italy and Austria, is being driven by several factors: the lifting of most restrictions, waning immunity from vaccines and booster shots, and the spread of the new, highly transmissible omicron sub-variant BA.2.



War developments, casualties, and reactions
Ukraine’s President Volodymyr Zelensky called for more pressure on Russia, as the war in Ukraine appears to be entering a stalemate after a month of conflict. The British government said Ukrainian forces are carrying out successful counterattacks against Russian units on the outskirts of Kyiv and may be regaining lost ground. NATO estimates that up to 40,000 Russian troops have been killed, injured, captured, or have gone missing during the first month of the Kremlin’s war. The United States plans to sanction approximately 400 Russian individuals and entities, including members of the elite and over three hundred lawmakers in Russia’s lower house of parliament, the Duma. On Thursday, Biden said NATO would respond in kind if Russia used weapons of mass destruction in Ukraine. He also said he would support an effort to expel Russia from the G-20 group of economies.



Fertilizer prices at record highs
As I have stated in earlier blogs, we believe Canada may benefit from the conflict with Russia invading Ukraine. Supply shortages have driven fertilizer prices to record highs. Prices for the raw materials used to make the fertilizers—ammonia, nitrogen, nitrates, phosphates, potash and sulfates—are up 30% since the beginning of the new year and now exceed those seen during the food and energy crisis in 2008. Canada has large potash deposits and is a major exporter of grains. The demand for these products continues to grow as the conflict continues.



On Monday, the US Securities and Exchange Commission debuted expansive rules that are aimed at protecting investors by requiring publicly traded companies to disclose how climate risks affect their business, outline their own greenhouse gas emissions and report on climate-related targets and goals.

Fed chair addresses inflation 
Fed Chair Jerome Powell this past week vowed tough action on inflation, which he said jeopardizes an otherwise strong economic recovery. He reiterated that interest rate hikes would continue until inflation is under control.



The US said Friday it will work with international partners to provide at least 15 billion cubic meters more of liquified natural gas (LNG) to Europe this year, seeking to end the bloc’s dependence on Russian energy exports following the Kremlin’s invasion of Ukraine.

Cryptocurrency companies could be forced to wind down their business in the UK if they fail to register with the finance watchdog ahead of a key deadline this week. From March 31st, firms operating crypto services in Britain must be registered with the Financial Conduct Authority, which is tasked with overseeing how digital asset firms combat money laundering.

UK inflation continues to surge
Hitting its highest level since March 1992, UK inflation in February surged to an annual rate of 6.2%. As it looks to contain inflation without snuffing out economic growth, the Bank of England has hiked interest rates at three consecutive monetary policy meetings, raising the cost of borrowing from its historic low of 0.1% to 0.75%.


China backs Russia’s G-20 membership
China has reportedly taken Russia’s side amid speculation that the US and international allies could seek to expel Russia from the G-20 . The likelihood that any bid to exclude Russia outright would be vetoed by others in the group, including China, India, and Saudi Arabia.



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