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Review of the top five things that happened in markets this week

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US stockmarkets received support from Federal Reserve Chair Jerome Powell, who signalled that a 25 basis point rate hike is likely at the upcoming FOMC meeting instead of the 50 basis point hike the market fears.

Surging commodity prices helped the Australian sharemarket lock in five straight days of gains as it looked to reclaim the 7200 level that it broke down from last week following the Russian invasion of Ukraine.

Here is a review of the top five things that happened in markets this week:

Ruble turns to rubble

The new round of harsher sanctions imposed on Russian banks, companies and individuals saw the Russian currency, the ruble, fall by over 40 per cent.

The fall in the ruble will lower the standard of living for Russians and see a surge in Russian inflation.

Bitcoin explodes higher

Sanctions imposed by the West on Russia sparked a 20 per cent rally in Bitcoin as Russians sought ways to get their hard-earned savings out of the country and the tumbling ruble.

Additional support came from a dovish reassessment of the Federal Reserve’s hiking cycle, which supports risk assets, including Bitcoin.

Crude oil catches fire

Crude surged more than 20 per cent, above $112 per barrel, as buyers rejected Russian crude oil, the Russian attack on Ukraine intensified and after OPEC+ maintained its existing policy of increasing output by 400,000 barrels per day, despite calls for an increase in production.

Bank of Canada lifts interest rates for the first time since 2018

The Bank of Canada (BoC) raised interest rates for the first time since 2018, by 25 basis points to 0.50 per cent.

The accompanying statement noted, “persistently elevated inflation is increasing the risk longer-run inflation expectations could drift upwards,” consistent with the view that the BoC will deliver four additional rate hikes this year, and four in 2023.

AU Q4 GDP rebounds

Australian Q4 GDP rebounded by 3.4 per cent (quarterly) boosted by eased lockdown restrictions.

Economic activity is now 4.2 per cent above its level from a year ago (and 3.4 per cent above pre-Covid) and sets up 2022 for GDP growth above trend.

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