Russian/Ukraine risk once again sent commodities soaring and equities were pressured to start the week. However, the equity dip found buyers midweek as a temporary halt in military activity by Russia also gave markets a period of calm. The ECB met on Thursday as they tried to steer a path between dealing with rising eurozone inflation without hindering growth even as Russian risk weighs on global growth prospects. Going forward the question for stocks will be if a global stagflationary environment can be avoided. If it can’t then another leg lower in US stocks could be possible. These are uncertain times for markets.

Other key events from the past week

• Oil: US oil surges past $120, Mar 07: US oil soared at the start of the week as the US moved to ban imports of Russian oil. The UK joined the US in the ban, but spared natural gas and coal imports. High oil prices weigh on global growth and remember that gold will be a key beneficiary in a stagflationary environment.
• EUR: Interest rate statement, Mar 10: The ECB’s decision was leaning on the hawkish side as they confirmed the end of the APP programme in Q3. This keeps the prospect of a rate hike in December alive for the ECB.
• USD: Inflation, Mar 10: The US inflation print came in as expected at 7.9% y/y for the headline. The Fed meets next week and the market will be focused on how aggressive the Fed will be in light of the Russian/Ukraine crisis.

Key events for the coming week

• USD: Interest rate decision, Mar 16: The Fed are set to hike interest rates by 25bps at next week’s meeting to deal with headline inflation above 7%. However, how will the latest Russian/Ukraine crisis impact the future path of rates?
• Seasonal trades: Adidas gains?: Adidas shares have a strong period of seasonal strength. Does that make Adidas shares good to buy on the Russian risk dip?
• GBP: Interest rate decision, Mar 17: The Bank of England’s last meeting saw 4 out of the 9 members voting for a 50bps hike. Will inflationary pressures still be a major concern for the BoE? STIR markets see a 100% chance of a BoE hike this month. Could Russian risk give them the reason for caution?

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