Markets consolidate following previously strong session for bull traders
European indices opened without clear direction on Wednesday, as markets consolidated following another strong session for bull traders yesterday. The rotation from safety to riskier assets continues this week as investors keep on fleeing bond markets in favour of equities. The Fed’s resolution to do whatever it takes to reduce inflationary pressure, including a half a point rate hike at the next meeting, stimulates confidence in growth resilience and is driving cash out of treasuries, leading yields to new highs. The sentiment is slightly different in Asia but leads to the same results as investors continue to welcome the dovish switch from Beijing to support its domestic markets, while Japanese shares took advantage of a weaker Yen. The Risk-on stance continues, and most benchmarks have now pared half the losses registered since January, despite lingering uncertainties towards Eastern Europe geopolitical tensions with no end in sight to the current conflict. Investors are likely to pay attention to tomorrow’s emergency NATO summit where more sanctions towards Russia are expected while today’s US Existing Home Sales, Crude Oil Inventories and speeches from BoE Gov Bailey and FED Chair Powell may bring more market volatility.
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