Stock markets were rallying again at the start of the week as investors continued to be encouraged by reports of progress in talks between Ukraine and Russia.
While there has unfortunately been no de-escalation within Ukraine, there was hope that talks between the two sides could lead to a ceasefire. That may be premature, even misguided given how events have unfolded over the last few weeks. But stock markets have fallen considerably in that time and the recovery we saw still paled in comparison.
The fact that the two sides were talking and in agreement that it was heading in the right direction was obviously a good thing though, which was why we saw some relief. There was still a long way to go and a certain amount of damage as a result of the invasion has been irreversible as a result of the sanctions imposed.
Higher commodity prices could fall back to more reasonable levels though in the event of a ceasefire which would certainly ease the significant headwinds currently facing the global economy this year.
The EU imposed fresh sanctions on Russian oil firms, but they have once again sought to do so in such a way that still enabled purchases of the oil itself, just not other activities such as investments, technology transfers, etc. We’ve seen in recent weeks that sanctions can have unintended consequences though which can indirectly affect purchases. I wonder whether we’ll see extra efforts in the coming weeks to reduce that, which could further ease the pressure on oil prices.
Bitcoin lagging behind other risk assets
Bitcoin was pretty flat on the day and appeared to be missing out on the risk rebound we saw across the broader markets. Other risk assets were performing very well, just the kind of environment you would typically expect to see Bitcoin flourishing in, but that was not really the case. In fact, it was trading lower in the day and actually recovered those to trade near the day’s highs.