ANZ Research discusses the current market conditions and maintains a cautious bias on risk assets in the near-term.
"Until US CPI conclusively eases, the upward limit for interest rates remains undetermined, raising the likelihood of a hard landing. Worsening the outlook is the ongoing Ukraine conflict and China’s hard-line pursuit of a zero-COVID strategy. The latter has helped to take the heat out of commodities, while equities worldwide are experiencing selling pressure reminiscent of early 2020," ANZ notes.
"In this environment, economic fundamentals are no longer the focus, as a flow-driven “sell the rally” mentality takes precedence. Consequently, risk assets and currencies will face significant volatility and find it challenging to maintain consistent upward momentum. USD dominance is likely to persist for the time being, as the euro faces geopolitical pressure," ANZ adds.