Russia-Ukraine peace talks, China measures restore some confidence in this week’s markets


US shares rebounded this week, recovering last week’s 3 per cent loss and more.

The Australian sharemarket, the ASX200, also put its best foot forward to reclaim 7200, a level that it spent the past three weeks trading below.

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

1. Russian-Ukraine peace talks make headway

Conflicting narratives have surrounded the status of negotiations between Russia and Ukraine.

However, an acknowledgement by Ukraine’s President Zelensky that peace talks were becoming “more realistic” after three bitter weeks of the war was a positive development.

2. Fed Reserve raises rates for first time since 2018

The Federal Reserve raised interest rates by 0.25bp, taking the Fed Funds rate from a range of 0 to 0.25 per cent to 0.25 to 0.5 per cent and flagged another six-interest rate hikes this year, as well as the imminent start of quantitative tightening.

The interest rate hike and accompanying forward guidance were mainly as expected due to the tight US labour market and high inflation.

3. China takes measures to restore confidence

After a wild ride in Chinese equity markets, China’s State Council announced steps to restore confidence in the economy and capital markets.

A new COVID treatment strategy was also revealed to balance COVID containment with economic activity.

After these announcements, Hong Kong’s stockmarket, the Hang Seng, rallied almost 10 per cent.

4. Australia’s unemployment rate drops again

Australia’s unemployment rate dropped to 4 per cent in February, the lowest level since August 2008, despite a lift in the participation rate to a new record high of 66.4 per cent.

The robust report increases the chance the RBA hikes rates as early as June.

5. Crude oil falls 30 per cent

Crude oil has fallen more than 30 per cent from last week’s $130.50 high as the market adjusts to the loss of Russian oil imports and looks to alternative supplies.

The sharp drop in the crude oil price will hopefully see the price of petrol at the bowser drop below $2.00 per litre by the end of next week.

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All trading carries risk. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

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