It’s a case of risk off a little this morning with a reaction to the worsening situation coming out of the Ukraine following the deployment of Russian troops into the Crimea over the weekend. With the major indices at close to all time highs, and both the FTSE 100 and S&P 500 up nearly 5% in the last month, time for another breather.
The Russian stock market dropped around 10% on the news with the FTSE currently 60 points lower at 6,744. Gold futures are higher by $18 to 1,344 dollars per ounce and Brent crude was up $1.7 to just shy of $111 dollars per barrel. Market reports seem to indicate that economic sanctions might be applied against the Russian Federation. Leaders of the G7 nations released a joint statement “condemning the Russian Federation’s clear violation of the sovereignity and territorial integrity of Ukraine”. They suspended their participation in the G8 summit in Russia in June and hinted that Russia could be ejected from the club of economic super powers. The new Ukranian prime minister, Arseniy Yatseniuk accused President Putin of declaring war.
The Russian Central Bank raised interest rates by 1.5% to 7% after the Rouble fell 2.9% this morning taking the drop to 10% this year.
There was news at the weekend that US stocks are being driven to fresh highs by investors borrowing a record amount of money as margin debt hit a record level last month, according to data from the NYSE (New York Stock Exchange). The amount borrowed by investors to invest in equities hit $451 billion on the NYSE, a rise of more than 20% over the past year and higher than the $381 billion in 2007 before the 2008/2009 financial melt down.
The amount of money being bet on margin tends to exacerbate any major movements down as forced sellers come out in droves and are forced to liquidate their positions.
The developments in the Ukraine and the actions of President Putin will be watched with interest. With around a quarter of Europe’s energy needs served by Russia, Putin has a strong negotiating hand if the G7 group of countries decide to play hard ball. In particular, Germany will be careful in not forcing Russia to turn its gas supplies off.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.
by contrarianuk
Tensions in Ukraine cause sell off in equities this morning
Mar 3, 2014 at 9:34 am in Market Commentary by contrarianuk
It’s a case of risk off a little this morning with a reaction to the worsening situation coming out of the Ukraine following the deployment of Russian troops into the Crimea over the weekend. With the major indices at close to all time highs, and both the FTSE 100 and S&P 500 up nearly 5% in the last month, time for another breather.
The Russian stock market dropped around 10% on the news with the FTSE currently 60 points lower at 6,744. Gold futures are higher by $18 to 1,344 dollars per ounce and Brent crude was up $1.7 to just shy of $111 dollars per barrel. Market reports seem to indicate that economic sanctions might be applied against the Russian Federation. Leaders of the G7 nations released a joint statement “condemning the Russian Federation’s clear violation of the sovereignity and territorial integrity of Ukraine”. They suspended their participation in the G8 summit in Russia in June and hinted that Russia could be ejected from the club of economic super powers. The new Ukranian prime minister, Arseniy Yatseniuk accused President Putin of declaring war.
The Russian Central Bank raised interest rates by 1.5% to 7% after the Rouble fell 2.9% this morning taking the drop to 10% this year.
There was news at the weekend that US stocks are being driven to fresh highs by investors borrowing a record amount of money as margin debt hit a record level last month, according to data from the NYSE (New York Stock Exchange). The amount borrowed by investors to invest in equities hit $451 billion on the NYSE, a rise of more than 20% over the past year and higher than the $381 billion in 2007 before the 2008/2009 financial melt down.
The amount of money being bet on margin tends to exacerbate any major movements down as forced sellers come out in droves and are forced to liquidate their positions.
The developments in the Ukraine and the actions of President Putin will be watched with interest. With around a quarter of Europe’s energy needs served by Russia, Putin has a strong negotiating hand if the G7 group of countries decide to play hard ball. In particular, Germany will be careful in not forcing Russia to turn its gas supplies off.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.