However, according to TeleTrade analyst Ilya Frolov (https://www.teletrade.eu/pt), the cost of fuel as well as gold contracts and bond yields are under the primary influence, while stock indexes are relatively quiet.

Oil prices soared by almost 15% since the start of outright military moves, reaching the highest values since 2014. The North Sea Brent benchmark is consolidating above $110 per barrel today, as U.S. and European consumers tried to seek out alternate sources in the undersupplied market. Many of them are waving away deliveries from Russia, as it is hard to repay such contracts while sanctions are imposed on Russian banks, moral issues are heightened, and the pressure of world public opinion is felt.

Thus, oil giants outside Russia are on the sunny side. Chevron shares jumped 3.97% to see its highest level even after the oil giant raised its buyback program and the CEO's forecast for operating cash-flow through 2026 was released. ExxonMobil stocks added 0.96% yesterday despite the fact it may suffer after withdrawing from the Russian Sakhalin-1 venture, following the departure of British Shell and BP from Russia. BP was the biggest foreign investor into the Russian oil industry.

Gold futures felt limited upside gains as prices were near the technical resistance area of $1950-1970 per troy ounce. From the fundamental point of view, upside moves for precious metals contracts may be on halt, while the flagship corporates in the global stock market provide a real chance to cover a significant part of inflation losses. Many market participants are tempted by those opportunities despite high risks.

Before the middle of the week the Euro Stoxx 50 composite indicator was trading near the 3,700 area, which was last seen about a year ago. This price location is about 15% lower than the levels of the first days of January 2022. TeleTrade analyst considers that just one third of this correction could be attributed to geopolitical reasons, while the rest was prompted by the short-term downward mood in anticipation of monetary tightening by major central banks.

There is too much uncertainty surrounding the U.S. Federal Reserve’s (Fed) interest rate hikes this year. The odds of a 50-basis point hike on March 16 dropped to about 1.5% from 34% last week and 60% just three weeks ago, according to Fed Watch monitoring tools. Potential moves of the European Central Bank and other financial regulators are now pressured by expectations that the Fed is unlikely to raise interest rates as aggressively as initially expected, primarily due to the side effects of anti-Russian sanctions on the global recovery.

Expectations of maintaining relatively accommodative monetary policy for a while, combined with moderate dip buying activity are at the backbone of rising stocks as Euro Stoxx 50 rose by 1.75% on Wednesday. The U.S. S&P 500 broad market index rose even more, by 5.5% above the recent bottom of February 24.

Banking stocks like JPMorgan Chase plunged to its 52-week lows, Wells Fargo and the Bank of America were hit as their income largely depend on Treasuries bonds with now falling yields and partially disrupted international transactions. However, while discussing Wall Street as a whole, it seems that the same big sharks are optimistic.

JPMorgan said in its note to clients on Monday that investors who sell stocks now are taking a risk of missing the rebound. "If one is selling on the back of the latest geopolitical developments now, the risk is of getting whipsawed... Historically, [the] vast majority of military conflicts, especially if localized, did not tend to hurt investor confidence for too long, and would end up as buying opportunities," JPMorgan analysts wrote. At the same time, they warned that a rise in commodities prices could be a factor that derails growth, as "oil prices have so far risen by less than many expected." Mislav Matejka, a Goldman Sachs analyst, said the war is unlikely to have a major impact on the world economy and on the fundamental factors that drive equities.

Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

Ilya Frolov, Chefe de Gestão de Portfólio, TeleTrade