The previous week turned out to be one of the most difficult for world markets. Hawkish statements from Jerome Powell dealt a huge blow to investor sentiment, leading to a unanimous fall in all the world's significant stock markets.
According to the Fed chairman, their meeting on May 4 could approve a rate hike of as much as 0.50% to 1.00%. Such news could not even be smoothed over by the decision of the ECB to take a wait-and-see attitude against the backdrop of galloping inflation. An additional negative, primarily for Asian markets, was the outbreak of COVID-19 in China, which will not subside any time soon and may once again have an effect on both the Chinese economy and the global economy.
In part, these news, as well as the continued increase of dollar, led to a collapse in commodity markets today. Investors fear that the pandemic in China and the threat of recession in economically developed countries, aggravated by the crisis in Ukraine, will lead to the start of a deep recession in the global economy.
What to expect this week in the markets?
The overall negative trend will most likely continue, primarily due to the upcoming rate hikes from the Fed. In that regard, demand for the dollar will continue to increase, most likely throughout this week.
As for the oil market and the commodity market, they will remain under pressure because of the outbreak in China and the threat of recession, which was brought by the sky-high inflation and rising interest rates. In this situation, even the traditional defensive asset - gold - is likely to decline sharply.
This is why many already expect to see a negative opening in today's US session, especially since the main local stock indices are already in the "red" territory.
