A strong U.S dollar is a key element exerting pressure on oil prices

US stock markets: The three main Wall Street stock indexes rallied yesterday, a day before an expected interest rate hike by the U.S Federal Reserve, while oil prices dropped 7% in hopes of an end to the conflict in Ukraine. 

Investors are expecting the U.S central bank to raise interest rates for the first time in three years by at least 25 basis points amid surging prices. Traders will also be closely watching the Fed for details on how it plans to end its bond-buying program. 

Ahead of the Fed's meeting on Wednesday, the benchmark 10-year note yields eased from more than two-year highs and were last at 2.1544%, after earlier rising to 2.169%, the highest since June 2019. I think the big event this week is going to be Fed discussing what they're going to do with the portfolio and how fast they're going to move. 

Economic Calendar

The expectation in the short term of course is going to be the raising of the rates by a quarter of a percent. The Dow Jones Industrial Average rose 1.82%, the S&P 500 gained 2.14% and the Nasdaq Composite added 2.92%.

Dow Jones Industrial Average

The Dow Jones Industrial Average gained 1.82%. The best performers of the session on the Dow Jones Industrial Average were Walt Disney Company, which rose 4.01% or 5.17 points to trade at 134.20 at the close. Meanwhile, Microsoft Corporation added 3.87% or 10.71 points to end at 287.15 and Procter & Gamble Company was up 3.64% or 5.28 points to 150.33 in late trade. The worst performers of the session were Chevron Corp, which fell 5.00% or 8.34 points to trade at 158.38 at the close. Dow Inc. declined 2.37% or 1.43 points to end at 58.85 and Caterpillar Inc. was up 0.44% or 0.95 points to 216.39.

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NASDAQ 100

The NASDAQ index gained 2.92%. The top performers on the NASDAQ Composite were Sonim Technologies Inc. which rose 103.33% to 1.22, Incannex Healthcare Ltd ADR which was up 48.47% to settle at 34.00 and Jaguar Health Inc. which gained 44.53% to close at 0.55. The worst performers were Evolv Technologies Holdings Inc. which was down 43.14% to 1.70 in late trade, Cepton Inc. which lost 28.79% to settle at 4.28 and Better Therapeutics Inc. which was down 22.96% to 3.12 at the close.

Oil price - Crude Oil market, Brent Oil market

Oil prices rose over $1, bouncing back after earlier declines, as Russia's invasion of Ukraine continues to stoke volatile trading with ceasefire talks the latest market trigger. U.S crude rose 45 cents, or 0.5%, at $96.89 a barrel. 

Ukrainian President said in a video address released early today that the positions of Ukraine and Russia at peace talks were sounding more realistic, but more time was needed. Traders are awaiting more clues from ceasefire talks after a two-day selloff in the oil markets, but the crude prices may continue being under pressure as high inflation will eventually drag on economic growth and weaken demands.

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A strong U.S dollar is a key element exerting pressure on oil prices and investors expect the U.S Fed to adopt a more hawkish monetary policy to curb flaring inflation. Analysts expect the Fed to raise its benchmark overnight interest rate by a quarter of a percentage point at the end of its two-day policy meeting today.

Precious and Base Metals - Gold price, Silver price, Palladium price Precious and Base Metals

Gold extended its slide yesterday as ceasefire talks between Russia and Ukraine reduced demand for safe-haven assets, while bets that the U.S. Federal Reserve may raise interest rates for the first time in three years added to pressure on bullion. Spot gold was down 1.3% at $1,926 per ounce, after earlier touching its lowest since March 2 at $1,920.36. 

U.S gold futures fell 1.7% to $1,927.80. Some faint hopes that talks between Ukraine and Russia may somehow lead to a de-escalation that has affected safe-haven demand for gold. While gold is seeing a bit of a lull, the Ukraine situation is still unfolding, with market volatility and uncertainty likely to remain quite high. 

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European stocks fell more than 2% as concerns about surging coronavirus cases in China added to nerves ahead of the Fed policy meeting. The Fed is expected to raise borrowing costs by a quarter of a percentage point at the end of its two-day meeting today. The impending announcement has kept U.S. 10-year treasury yields elevated and put pressure on gold since rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion. 

The first-rate hike move from the U.S. quite often signals a low point in gold, so we’ll see what kind of signal they send tomorrow, and how hawkish their statement is, which will probably determine the short-term outlook from here. Meanwhile, spot palladium was up 1.1% at $2,412.55 per ounce, after its weakest session in two years on Monday on easing supply fears. 

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Palladium is a notoriously low-liquidity market, Hansen said, and with the war premium being taken out of commodity markets, palladium has not been shielded. Spot silver shed 1.6% to $24.62 per ounce, while platinum slipped 1.6% to $1,013.58.

Traditional Agricultures - Corn futures, Wheat futures,  Soybean futures

Wheat futures gained yesterday, supported as export curbs by Russia fuelled concerns about global supply, while traders see the recent decline as an opportunity for bargain buying. Soybeans fell in reaction to investor worries that renewed coronavirus outbreaks in China could curb demand, while corn traded both sides of even as trade awaited talks between Moscow and Kyiv that could progress towards a ceasefire. Corn and soybeans were pressured by outside markets with crude oil, falling steeply.

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