WTI crude adding to Friday’s massive 7% loss – Daily Market Brief, June 20, 2022

European bourses point to a modestly stronger open on Monday, rebounding from losses the previous week, as recession fears hurt risk sentiment.

·         Risk sentiment improves at the start of the week but concerns over the outlook could limit gains

·         USD eases, the yen remains fragile, and the euro rises despite Macron’s loss

·         Oil is edging lower after dropping almost 10% last week on demand destruction fears

Global stock indices dropped sharply lower last week after central banks showed that they were prepared to tighten monetary policy aggressively in order to tame inflation, even if that meant recession.

The Federal Reserve hiked rates by 75 basis points, and Federal Reserve Chair Powell reiterated the central bank’s commitment to lower inflation. The SNB also shocked everyone by raising interest rates by 50 basis points. When one of the most dovish major central banks adopts a much more hawkish stance, the markets pay attention.

Over the weekend, Federal Reserve policymaker, Christopher Waller, supported a further 75 basis point hike in July, and even the typically more cautious Raphael Bostic said the Fed should keep hiking in order to tame inflation.

This week, given the lack of high-impacting events, markets are expected to continue digesting last week’s events and weighing up the chances of the Fed engineering a soft landing for the world’s largest economy.

Asian markets slipped overnight on recession concerns, and European markets are heading for a mixed start. The FTSE is expected to open 0.05% higher, and the DAX is looking to a 0.1% rise at the start.

German PPI

The market has brushed off data showing that German PPI rose to 33.6% YoY in May, a fresh record high. Hot factory-gate inflation often points to consumer prices rising higher. The data comes after the ECB indicated that it would hike rates in July and again in September to tame inflation.

Looking ahead, UK inflation is likely to be the key release for Europe this week and is expected to show consumer prices continued to rise in May to 9.8% YoY.


In the FX market, the USD is taking a breather after strong gains last week. The yen remains fragile near a 24-year low after the BoJ, proved to be the most dovish major central bank, and stuck to its loose monetary policy.

The euro is managing to push higher, despite French President Macron losing his absolute majority in the National Assembly in France over the weekend. This is a disappointing result for the recently re-elected French President who could now face political paralysis.


Oil prices are heading lower at the start of the week, extending steep losses of almost 10% from the previous week. Oil dropped 6% on Friday alone as recession fears hurt the demand outlook, overshadowing worries about tightening supply. Slower global growth would naturally result in lower oil demand. Meanwhile, supply remains tight amid the West’s sanctions on Russian oil, although the US has released strategic reserves and OPEC+ has also agreed to ramp up output to help ease tight supply.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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