Traders shrug off Russia sanctions
Stock markets in Europe and the US have rebounded from the sharp declines that were seen yesterday. Now that the dust has settled, it seems that traders are not overly concerned about the relatively limited sanctions announced against Russia. Western governments have taken a reasonably measured approach to dealing with Moscow for now, but it is possible that further sanctions will be announced should President Putin not ease up on his position. This latest round of Russia-Ukraine political tensions has been going on for weeks, and it is likely to stay with us for the foreseeable future. For now, stock markets such as the DAX, the FTSE 100 and the S&P 500 are firmly in positive territory, but it is important not to forget about the painful declines that were seen yesterday – the German equity market fell to an 11-month low. The markets are now waiting to see what Russia will do next, and that is likely to dictate the sentiment.
Gold has moved a little lower following on from the 9-month high that was posted yesterday – the political rumblings boosted the metal. Today is a different story, as dealers are banking their profit, but the wider uptrend is still intact. Russia is a major producer of platinum and palladium, and the metals are higher today as there are concerns that supply levels could be squeezed as Russia might be in for several more rounds of sanctions.
Earlier today, the final reading of the eurozone CPI was confirmed at 5.1%, in line with the flash report. It is the highest level on record. The high cost of living in the region will keep some pressure on the European Central Bank. At the last meeting, the ECB didn’t rule out the possibility of hiking rates this year, but at the same time, it wasn’t exactly a hawkish update. The euro is mixed today as it is up versus the US dollar, but it has retreated against the Swiss franc. The New Zealand dollar is the outperformer as the Reserve Bank of New Zealand hiked rates by 0.25%, the third hike since October.
