Risk Appetite Returns, USD Eases Slightly

US stock indices rose notably on Monday, trying to erase some of their last week’s losses. The Nasdaq 100 index returned above the important 13,000 USD threshold. Oversold conditions in stocks could lead to a relief rally (bear market rally). 

Nonetheless, given the wide range of concerns about the markets’ future, many analysts have taken a more cautious approach to U.S. stocks in the short term. For example, Bank of America analysts led by Savita Subramanian lowered their price objective on the SP500 by 100 points to 4,500 USD in a report released Friday.

“This year’s market does not appear to be dominated by one factor, be it fundamentals or positioning, cost of capital or corporate outlooks, but has been reacting to all of the above in big swings,” the analysts wrote.

Oil embargo nears

Oil prices fell slightly on Tuesday but remained high, with oil trading above 100 USD. The European Union is poised to finalize measures to strengthen sanctions against Russia this week, perhaps deciding on an oil embargo.

There has been a debate inside the bloc about pursuing this next move. Still, expectations are building after Germany, the group’s most robust economy, and de facto leader, stated that it was willing to support an immediate embargo. Hungary and Slovakia, both strongly reliant on Russian oil supplies, might be exempt from any agreement.

Today’s best performer in the FX market has been the Australian dollar, rising nearly 1% after the Reserve Bank of Australia hiked the policy rate by 25 basis points to 0.3%. The AUDUSD pair shot to 0.72 before correcting some of the gains. The greenback was seen broadly lower during the EU trading session today.

Light macro calendar

Later today, the EU PPI indices are due, expected to show a 36.2% yearly inflation in March, while the monthly gauge is seen rising from 1.1% to 4.9%. Yet, the ECB is still reluctant to raise rates. 

US JOLTS job openings will be released during the US session, along with factory orders. However, these data rarely cause any market volatility. 

Source: https://www.axiory.com/-/market-news/risk-appetite-returns-usd-eases-slightly