TOPICS MENTIONED IN THIS MARKET BRIEFING:
- LEuropean Stock Exchanges start a rebound
- Wall Street save the furniture at the end of the session
- Chart of the day – BTC/USD: a bullish divergence
European stock markets begin to rebound
European Stock Exchanges are moving up at the start of the session on Tuesday, regaining part of the ground lost the day before in the face of geopolitical tensions and uncertainties about US monetary policy, which continue to fuel volatility.
Markets are likely to remain highly volatile due to lack of signs of easing tensions related to Ukraine; Futures contracts on the main US indices are also pointing to another sharp decline. The EuroStoxx 50 volatility index remains at its Monday level, the highest since November 2020.
The Fed begins this Tuesday two days of debate at the end of which it should specify its intentions in terms of raising rates and reducing its balance sheet, two major concerns for investors. Money markets continue to bet on a first hike in the fed funds rate target in March, but debate remains open on the number of hikes to expect between now and the end of the year.
The start of trading in Europe was also driven by several earnings releases.
Wall Street saves the furniture at the end of the session
Wall Street ended higher on Monday, driven by a resumption of trading late in the session. The S&P came close to correcting as investors showed caution amid geopolitical tensions around Ukraine and pending decisions from the US Federal Reserve.
The Fed is meeting its monetary policy committee on Tuesday and Wednesday. Investors hope at the end of this meeting that it will be able to clarify its intentions in terms of raising rates and reducing its balance sheet, two elements of uncertainty at the origin of the market turbulence in recent sessions.
On the geopolitical front, renewed tension between Moscow and Western powers over the situation in Ukraine, where the United States and Britain have decided to evacuate their nationals, has also deterred risk-taking during the major part of the session.
Consequently, the Dow Jones gained 0.29% to 34,364.50 points. The Nasdaq advanced 0.30% and the S&P 500 gained 0.28%.
Othersfinancial market news
The oil market regained some of the ground lost on Monday, with tensions in Eastern Europe and the Middle East still raising fears of tensions over global supply.
Today’s economic calendar:
Find the full economic calendar to know all the economic events to comer.
CHART OF THE DAY – BTC/USD: a bullish divergence
the Bitcoin tumbled more than 7% on Monday in the wake of US indices to hit its lowest level since July as fears of a Russian attack on Ukraine prompted a sell-off in riskier assets. In addition, BTC was already weakened by the monetary policy expectations of the Federal Reserve judged hawkish.
From a technical point of view, despite falling 7%, the asset managed to close in the green. Thus, the previous day’s session features a candle with a long declining wick, which suggests that the sellers are drying out at the support at $33,850.
On this 4-hour chart, buyers are trying to recover. It is clear that prices have validated a bullish divergence on RSI. Therefore, this pattern calls for a rebound towards $41,000 (resistance + bearish slant).
Of course, it is still too early to speak of a bullish recovery, however the worst is not certain. The Fed’s announcements on Wednesday should precisely give visibility to investors. Therefore, a breakout of $41,000 would be seen as an encouraging signal for the start of a bullish restart.
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