Positive risk sentiment after the bloodbath

Important news for the week

• Tue, 13th, 14:30 CET US Producer prices index.

• Wed, 14th, 04:00 CET NZ Interest rate decision.

• Wed, 14th, 14:30 CET US Consumer precise index.

Stock market correction

The recent correction in the equity sector did not come without reason from Japan. With the debt burden veins higher than 250% compared to the GDP Japan remains vulnerable. Investors favored liquidity and closed positions after the BoJ started to increase interest rates. Whether they will increase rates further to offset inflation might be debated. After a correction of more than 12% in the Nikkei markets were calm again, likely as well with the intervention of the Central Bank, which might have also acted as a buyer for equities. The potential further strength of the JPY might erode this system further over time as carry trades are being closed.

Market talk

After the strong correction last week market sentiment turned positive. Most indices look like they might rise again and the currency market also reflects this. The AUD as a risk- on currency is gearing up steam. From the demand side also oil prices show a positive impact and might test the USD 80.00 level again. The interest rate decision in New Zealand could also cause the Kiwi to rise further, should the RBNZ not reduce rates, which is currently expected this way. In the crypto sector most markets have geared up steam with Bitcoin resuming its upside. The proclaimed safe- haven status might be debated, though, since markets have corrected sharply alongside the equity sector.

Tendencies in the markets

• Equities positive, USD weaker, cryptos positive, oil positive, metals positive, JPY weaker.