Brent traded below $100 after heightened diplomatic efforts to reach and early end to Ukraine crisis. Gold also trading at $1926 after having seen high of $2069 last week. Worst fears on Ukraine issue have subsided for the time being. Renewed Covid fears in China is also affecting Oil prices.
PSX in green today as worst fears related to Ukraine of National politics gave way to hope. KSE100 Index gained today 353 points (+0.81%) closing at 43,720. Traded value also increased by 30% over yesterday's low. Trading pattern confirms absence of any selling pressure. I expect that market gains would be substantial once there is more clarity on commodities prices, Ukraine situation and on national front. Market participants have shown that they are ready to respond to even slightest of positive tone on these fronts.
Rupee remains under pressure aiming for 180 for a dollar. IMF talks latest round remaining inconclusive. This is our chronic issue made worst because of Afghanistan. Any breakthrough of Afghanistan with western countries in terms of release of Funds and opening of diplomatic channels will take pressure off Pakistan Rupee.
Dow Jones is holding on above 33k. International stocks had turned positive on Ukraine resolution hopes. In my sense equities are precariously balanced considering that markets are at record high, Fed expected tightening, increasing inflation, and high volatility in commodities market.
Volatility in stocks, currencies and US Treasury yields has increased.
There are increasing signs of stress in markets as some of the financial indicators are showing. One such indicator is FRA-OIS spread. It measures the gap between the US 3 month forward rate agreement and the overnight index swap rate. This indicator was recently at its highest since May 2020.
Another indicator ( spread between the US 3 month Libor and the overnight index swap rate) that measures stress in short term funding was also high.