Markets Hold Steady But Optimism Looks Fragile

Published 03/22/2022, 09:42 AM
Updated 07/09/2023, 06:31 AM

Following modest losses on Wall Street, Asian stock markets were mostly positive on Tuesday. Similarly, European equities have settled in the green territory, albeit gains are limited, with the overall optimism looking fragile as geopolitics stays in the market focus. 

According to the latest reports, the Kremlin said that Russia-Ukraine talks are still continuing, but they would like negotiations to be more active and sustentative. Moscow doesn’t intend to make public its detailed demands to Ukraine, officials noted in their latest remarks. Meanwhile, Ukrainian President Volodymyr Zelensky said that Russian forces see Ukraine as a gate to Europe.

As such, one shouldn’t expect things to change in negotiations in the near term, with talks progressing very slowly as the military operation continues. Against this backdrop, the current ascent in global stocks could be unsustainable, especially amid the persisting risk of further deterioration in the Russia-Ukraine crisis that affects markets globally.

So far, European stocks extend gains from the previous session, shrugging off hawkish comments from Fed's Powell who said on Monday that the central bank could move more aggressively to raise rates to combat the elevated inflation. The STOXX 600 Index was adding 0.5% ahead of the North American session, with US stock index futures erasing yesterday’s losses in premarket trading.

Meanwhile, the dollar gave up early gains to turn slightly negative after strong rejection from the 99.00 zone. The USD index slipped back below 98.50 as traders have already digested a hawkish message from the Fed, with upbeat risk trades capping safe-haven demand for the greenback. Still, the overall bullish trend for the buck remains intact. Furthermore, there is scope for fresh gains following a short-lived technical correction.

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