After a couple of weeks of handwringing and uncertainty, confidence seems to have returned to the ASX 200, which jumped to a one-month high yesterday, gaining 1.1%.
Stocks were buoyant on Wall Street indices, while oil prices rose 8% and gold was up for a second straight session.
The Dow Jones Industrial Average rose 1.2%, ending near 34,479 – its fourth day in a row trending up. The S&P 500 index rose 1.2% Thursday, with its energy segment up 3.5%, while the Nasdaq Composite Index gained 1.3%.
Australian shares started the day even and are expected to end the week well, tracking their international counterparts. The Aussie dollar rose from lows near US73.02 cents to highs near US73.92 cents and was near US73.80 cents at the US close.
Tight domestic jobs market
On the home front, the latest job data paints a picture of a tight employment market, with NSW jobless rates at their lowest since records began and employers apparently in a pitched battle for skilled workers.
With a federal election on the immediate horizon, this news will be music to the ears of the Federal Government, but considering the monumental rebuild effort required following the unprecedented floods in NSW and Queensland, will it be enough?
US monetary policy optimism
Just last week, Russia’s chokehold on Ukraine appeared to be driving fear into the hearts of co-dependent economies around the world - fuel and commodity prices were spiking and there was lingering concern about post-pandemic stagflation.
The first sign of a turnaround was the aggressive rate hike by the US Federal Reserve, kicking off a new era of tighter financial conditions to help combat inflation. No doubt the RBA will be planning its next move before long.
No-fly, won’t fly - but cash will
Shaky Russia-Ukraine peace talks continue, with Russian negotiators suggesting Ukraine might drop its NATO ambitions to adopt a ‘Sweden-like neutrality’ to appease the invader.
The US continues to pull all the economic levers it can to isolate Russia, recognising that the alternative could draw it and other NATO countries into direct conflict with the nuclear power.
On Thursday, the US House of Representatives voted to alter Russia’s trading status, allowing for higher tariffs on Russian imports. That bill is now with the Senate.
US President Biden continued to eschew President Zelensky’s pleas for a no-fly zone, instead offering his country a US$800 million package in military aid – expected to include anti-aircraft systems – which along with an earlier authorised $200 million, brings the total US assistance to Ukraine to US$1 billion.
It is anyone’s guess whether Russia's Putin sees this as tantamount to a back-door no-fly zone – but there seems to be consensus that as long as responses to the conflict are expressed in monetary rather than military terms, the West is on the right side of the line.
Fuel prices in flux
Oil continues its rollercoaster ride. Less than a week after US and global benchmark crude oil prices hit ten-year highs, fuel collapsed to $96.44 a barrel (West Texas) and entered a bear market, which is defined as a drop of more than 20% from a recent high – that high being $123.70 on March 8.
Overnight oil prices climbed 8% - back above US$100 a barrel, as the International Energy Agency said three million barrels per day of Russian oil and products could be shut in from next month.
Such was the fear about the Russian oil supply being turned off that Iran has been back at the negotiating table, with talks of a deal to lift US sanctions to allow it to contribute more oil to the markets.