Market Update

While it may be a new week, the prevailing themes that have been driving global equity markets remained consistent: concerns about inflation, and consequently, the potential for higher interest rates, as well as the ongoing conflict in Ukraine. Despite these ongoing issues, global equity markets managed to close the week on a positive note, fueled by hopes of a potential cease-fire between Ukraine and Russia, with negotiators describing this week's talks as "constructive."
Market sentiment received an additional boost from a significant drop in oil prices. The price of a barrel of Brent crude declined by more than 10% over the course of the week. This drop was attributed to President Biden's announcement of plans to release one million barrels of oil per day from the strategic reserves in an effort to alleviate inflationary pressures. Furthermore, the news of Shanghai, a city with a population exceeding 26 million, entering a lockdown due to a resurgence of coronavirus cases in China also contributed to the decline in oil prices. It's worth noting that this new lockdown presents a dual challenge: while it will reduce oil demand, it could exacerbate existing supply chain disruptions.
Looking ahead to the upcoming week, the primary focus will be on the release of the minutes from the most recent Federal Reserve monetary policy meeting, which took place on March 16, 2022. Several Fed policymakers have recently discussed the need to raise US interest rates by 0.5% at the next meeting, and potentially in subsequent meetings, making these minutes a critical point of interest for market observers.
Additionally, the week ahead will feature Russian PMI (Purchasing Managers' Index) and CPI (Consumer Price Index) data, which should provide valuable insights into how economic sanctions are affecting Russia's economy.