The situation surrounding the Ukrainian War remains confusing. Ukrainian President Zelensky gave an online speech at the British Parliament yesterday. Recognizing the speech of then-Prime Minister Churchill during World War II, he showed a strong stance that he would never surrender and never defeat. He urged further strengthening of sanctions against Russia.
Among them, in the NY market yesterday, the US stocks temporarily rose sharply in response to the president’s remark that “Ukraine no longer insists on NATO membership, which is one of the reasons why Russia invaded.” There was a scene where the crude oil market fell. However, after that, US stocks were pushed to sell again, and all major US stock indexes closed in the negative territory. NY crude oil futures also rose again.
The reaction to NATO’s remarks seems to be an example of how the market expects the situation in Ukraine to improve. However, the situation surrounding Ukraine remains severe. It has been argued that Russian troops may intensify their offensive after the implementation of the humanitarian corridor. It was also reported that Poland’s fighter planes would be handed over to the US side and decided whether to move to Ukraine. However, the repulsion of the Russian army is inevitable, and the risk of intensifying the war may be a concern. An early ceasefire is desired as the number of civilian casualties in Ukraine increases, but the situation is complicated by President Putin’s hard-line stance and the issue of Ukraine’s national sovereignty. First of all, I would like to pay attention to the whereabouts of the Russian-Ukraine foreign ministers’ talks mediated by Turkey.
Under such circumstances, the ECB Board of Directors will be held tomorrow. Without the Ukrainian problem, it was expected to show a gradual normalization of monetary policy in response to the economic recovery after the Severe Acute Respiratory Syndrome and the potentially prolonged inflation. However, the situation has changed significantly due to the Ukrainian War and the strong sanctions against Russia by Western countries. There are voices wary of stagflation, which will lead to a recession as inflation rises. It seems that the announcement of analysis results on inflation and economic conditions may be put on hold this time. Recent ECB officials have highlighted the wording of selectivity and flexibility. The outlook for when to start raising interest rates in the market is also swaying depending on whether it will be December or next year.
With the ECB board tomorrow ahead, buybacks are predominantly rising in the EUR due to uncertain caution.
However, depending on the remarks of tomorrow’s board of directors and President Christine Lagarde, it is assumed that there may be another decline.