Julien Ponthus shows you a glimpse at tomorrow’s markets.

European markets will soon start trading, with the news that Western countries are planning to increase sanctions against Russia in response to its invasion of Ukraine. They are also going to revoke their “most preferred nation” status for trade.

This move is not yet officially recognized. It allows for the imposition of tariffs on a broad range of Russian products and increases the pressure Wall Street’s Goldman Sachs and JPMorgan to announce a swift retreat from Russia.

Although global markets felt a brief surge of hope in the face of a possible diplomatic solution this week to the crisis, this morning the mood has shifted into the negative camp.

A strong U.S. inflation report has helped the dollar reach a new 5-year peak. The euro was unable to keep its ground as a more hawkish European Central Bank turn was offset by growing risks from Ukraine’s crisis.

While there are many ways for investors to measure the stress in the markets triggered by the conflict in Ukraine, such as oil and grain or stocks and bonds, the most popular is the Euro which has been referred to as the ultimate fear indicator.

Europe’s worst security crisis has taken the currency to a rollercoaster ride that saw it reach its worst week since COVID-19, and then its highest daily rise since 2016, the most since 2015.

Investors may feel disappointed that EU leaders meeting in Versailles west of Paris are discussing more spending on the conflict in Ukraine, but they have not made any announcements about a new joint debt issue.

The futures of European stock markets point to gains of approximately 1% at open. This will be less than the 1.7% that was lost yesterday.

As fears about Russian sanctions escalating, oil prices are stabilising. They were also on track to suffer their largest weekly declines since November.

Markets should be more informed by Friday’s key developments

After the invasion of Ukraine, Norway’s Orkla leaves Russia.

German Harmonized Inflation +5.5% y/y February

The UK’s economy rebounded strongly in January

China’s vehicle sales increase 19% in February

Japan sinks in business sentiment, household spending increases as Ukraine grows

Expectations for inflation at the U.S. University of Michigan