Equities: Resilience versus rates and Oil shock – Danske Bank

Danske Research Team highlights that equities rallied on Friday, leaving the broader market around 1% lower for the week, despite higher US CPI, front-end yields, and a surge in oil prices. Cyclicals outperformed defensives and the VIX remained below 16. This resilience indicates investor trust in a robust economy and earnings outlook.

Investors remain highly aware of the strong underlying economy and earnings backdrop, suggesting that equities declined only 1% amid higher rates and a steep oil rally. Today, Asian equities are trading lower, driven by IT stocks, while European and US futures follow a similar trend. The AI Fear 3.0 phenomenon is emerging in the market.

The AUD/USD exchange rate hits a one-and-a-half-week low near 0.7140 during the Asian session, down nearly 0.25% from the previous day. The USD/JPY pair gains traction at the beginning of the week, nearing the 154.00 mark, reversing some of Friday's losses. Spot prices are mostly confined within a range, hovering near a nearly seven-month low touched last Tuesday, as traders anticipate crucial central bank announcements this week.

Pi Network (PI) experiences a recovery, trading above $0.097 after two weeks of gains, as improved ecosystem development and technical indicators hint at a tentative recovery. However, overhead Exponential Moving Averages pose a challenge and limit PI's upward momentum. Throughout the week, the US Dollar exhibits a weakening trend, nearing four-month lows after flirting with the 100.00 level at the start of the month.