Another rollercoaster ride

The rollercoaster ride that is 2022 is continuing at the start of the week as European equities relinquish early gains to make heavy losses.

The week got off to a decent start, following reports of France brokering a meeting between Joe Biden and Vladimir Putin. While the West has continued to warn of an imminent invasion, with Russia apparently following the playbook for such a move, a meeting between the two leaders increases the potential for a diplomatic resolution.

But as we’ve seen so often over the last couple of weeks, the headlines are coming thick and fast and markets are responding accordingly. We’ve gone from optimism around a Biden-Putin meeting, on the back of Blinkin and Lavrov on Thursday, to the Kremlin denying concrete plans have been made and more reports of fighting in Eastern Ukraine.

It feels like the situation can dramatically escalate at any moment and that’s going to keep investors on edge for now. The fact that diplomacy is still being pursued is encouraging but the risk of this boiling over has not been higher. We may well be on the brink of something terrible happening and that’s continuing to feed into the negativity in the markets.

PMIs across Europe a cause for optimism

The PMI data from across Europe this morning has been a source of positivity at the start of the week, with countries appearing to bounce back quickly and strongly from the recent omicron wave. Signs of supply issues easing are also a big positive as that should contribute to price pressures abating over the coming months.

Ultimately, it’s encouraging that economies remain in such a strong position despite coming under enormous strain again in recent months. Restrictions and worker shortages have taken their toll once more but firms are bouncing back and extremely confident about the period ahead. Of course, it brings its own challenges but the prospect of uninterrupted, restriction-free trade will be music to the ears of many.

Bitcoin response key after the first setback in a month

Bitcoin has suffered in recent days as the mood in the markets has turned sourer. It’s recovered quite well over the course of the day, having been down a lot more at one stage. But the break of USD 41,500 on Thursday and then USD 40,000 over the weekend is a blow that will test its resilience. It’s performed very well recently under the circumstances and this is the first real setback in a month. How it responds will be key.

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

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