Today’s session sees EU Indices start with gains despite elevated inflation levels and as last week’s preliminary Michigan consumer sentiment data coming in above expectations. The CPI data reading was in line with analysts' expectation but the most important thing for the markets remains central bank decisions on interest rates and the potential impact of the new Omicron variant. Despite focus today being on the Bank of Canada’s announcement, it will be followed during the week by many other major banks which could lead to an increase in volatility across markets as they receive the news and evaluate the possible ramifications of such decisions. While many central banks are expected to leave rates unchanged, the prospect of fiscal and monetary policy changes continues to add pressure to riskier assets and a sign of continued support to the markets could provide some relief to concerned investors.
Oil prices pullback after attempted recovery
While many markets have struggled in recent weeks as a result of the new variant and persisting inflationary pressures, oil has been one of the most affected assets. Prices have pulled back significantly and have been increasingly volatile as supply and demand remain uncertain factors and as producers adjust prices to cope with changing circumstances. The situation today doesn't seem that different with oil prices rising in the first part of the session but pulling back over 2% after starting the day with an upward gap and are currently trading below Friday's closing prices. Despite no major news causing today’s moves, the situation remains very uncertain as any major disruption resulting from economic slowdowns or further restrictions could cause significant impacts on demand and subsequently prices of oil.