Persistent inflation in the US heightened investors’ fears of an aggressive monetary tightening

Finland is expected to announce its intention to join NATO today, while Sweden is likely to announce its intention a little later, EU diplomats and officials said. Russia’s invasion of Ukraine is changing European security. This move is likely to further anger Russia, as Moscow has repeatedly warned Finland and Sweden against joining NATO, threatening severe military and political repercussions. In the wider Scandinavian region, Norway, Denmark, and the three Baltic countries are already members of NATO.

In southern Ukraine, where Russia has seized some territory, Moscow plans to hold a fake referendum on independence or annexation to make its occupation permanent. Russian forces also continue to shell the Azovstal steel plant in the southern port of Mariupol. Ukraine claims that tens of thousands of people have probably been killed in Mariupol. Between 150,000 and 170,000 of the city’s 400,000 inhabitants still live in the city, which the Russian army has destroyed.

US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.5 million barrels from the previous week. This week, oil prices are under pressure along with global financial markets due to concerns about rising interest rates, the strongest US dollar in two decades, inflation, and a possible recession. Prolonged quarantine measures over COVID-19 in China, the world’s largest importer of crude oil, have also affected the market. The EU is still haggling over the details of the Russian embargo. The vote requires a unanimous decision, but Hungary is against a ban as it would be too destructive to its economy.

The rise in the dollar index harms gold prices. Gold has an inverse correlation to the dollar index and US government bond yields. US inflation is at its highest level, and aggressive monetary policy is already weighed on the price. Therefore, as inflation subsides, gold and silver will once again be good assets to buy, especially since gold miners have a steady increase in profits, which is not reflected in prices yet.

Asian markets closed higher yesterday. Japan’s Nikkei 225 (JP225) gained 0.18%, Hong Kong’s Hang Seng (HK50) added 0.97%, and Australia’s S&P/ASX 200 (AU200) increased by 0.19%. According to New Zealand’s Finance Minister, forecasts show signs of slowing inflation. The Monthly Business Survey of Australia (NAB) indicates very good business conditions and confidence. The April survey recorded a significant improvement in leisure and personal services sector conditions after a period of steady decline during the pandemic.