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Risk rebound as talks continue

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Stock markets are rallying again at the start of the week as investors continue to be encouraged by reports of progress in talks between Ukraine and Russia.

While there has unfortunately been no de-escalation within Ukraine, there is hope that talks between the two sides could lead to a ceasefire. That may be premature, even misguided given how events have unfolded over the last few weeks. But stock markets have fallen considerably in that time and the recovery we’ve seen still pales in comparison.

The fact that the two sides are talking and in agreement that it’s heading in the right direction is obviously a good thing though, which is why we’re seeing some relief. There’s still a long way to go and a certain amount of damage as a result of the invasion is irreversible as a result of the sanctions that have been imposed.

Higher commodity prices could fall back to more reasonable levels though in the event of a ceasefire which would certainly ease the significant headwinds currently facing the global economy this year.

The EU has imposed fresh sanctions on Russian oil firms, but they have once again sought to do so in such a way that still enables purchases of the oil itself, just not other activities such as investments, technology transfers, etc. We’ve seen in recent weeks that sanctions can have unintended consequences though which can indirectly affect purchases. I wonder whether we’ll see extra efforts in the coming weeks to reduce that, which could further ease the pressure on oil prices.

Bitcoin lagging behind other risk assets

Bitcoin is pretty flat on the day and appears to be missing out on the risk rebound we’re seeing across the broader markets. Other risk assets are performing very well, just the kind of environment you would typically expect to see bitcoin flourishing in but that’s not really the case. In fact, it was trading lower in the day and has actually recovered those to trade near the day’s highs.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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