Here’s your morning market update, where tensions are rising…
– It is all about Russian troops in the Crimea and the escalation in Ukraine and no doubt traders will be talking about the fact that Russia’s leader Vladimir Putin chose to attend Russian war games while the West postured and protested. It’s a strong signal that he is unmoved and unwavering at the moment.
– The impact of course was to hit markets and hit them hard. Stocks are down, Gold and the US dollar are higher, US Treasuries have rallied, Crude prices are up again and Wheat has surged, dragging Corn along for the ride. Uncertainty is never good for markets and nothing is more uncertain geopolitically than what is happening in Ukraine at the moment. Indeed it’s an environment ripe for rumours and falsehoods, with Ukraine saying it has received a Russian ultimatum to surrender in the Crimea and the Russians saying it’s bunkum.
– So at the close US Stocks are off their lows but the Dow is still down 154 points or 0.94%, the Nasdaq is off 0.72% while the S&P 500 has lost 13 points to 1846 for a 0.72% loss.
– In Europe of course, things were much worse due to their proximity to the standoff. The DAX fell 3.44%, the CAC dropped 2.66% and stocks in Milan and Madrid lost 3.34% and 2.33% respectively. The UK performed relatively better, down 1.49%.
– Locally, the Aussie dollar is actually up as we discussed earlier and sits at 0.8924. The ASX in Futures trade overnight has seen the March contract lose 23 points to 5365, which even with yesterday’s fall is not a bad performance.
– On global FX markets, it was a tale of US dollar strength across the board (except versus the Aussie) with the euro down 0.38% to 1.3732 and sterling losing 0.52%, which is a bit weird given the positive data. Regardless, it sits at 1.6658 this morning (I’m short). The USDJPY is trading below an important trendline support which gave way yesterday and while it hasn’t broken open yet, at 101.37 it looks biased lower.
– On commodity markets, Gold bounced $31 or 2.35% to $1352, Nymex Crude was up 2% to $104.64 (a big tax on the global economy) and Copper closed down a cent at $3.22lb. On the Ags, Wheat fairly roared (Ukraine farmers were already holding onto wheat last week) up 4.63% while Corn was 1.69% higher and Soybeans fell 0.49%.
On the data front today, the RBA meeting this morning will see the results announced at 2.30pm. We have a great preview from Annette Beacher from TD this morning here. Also out in Australia are building permits and Q4 current account balance which is important for tomorrow’s GDP.
Offshore, UK PMI, Euro PPI and US ISM New York and the monthly Redbook index are out.
The key though remains the Crimea and all eyes will remain focused on it.
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Now here is Ric Spooner from CMC MArkets Stock to watch today
Newcrest Mining could be a trader’s stock over coming weeks given potential for significant movements in gold as the situation in the Ukraine unfolds.
This much beaten up stock recently moved above its 200 day moving average for the first time since October 2012. In recent weeks the price has rallied steeply with a trend line and 20 day moving average now tracking below the share price and providing support at around $11.07. After yesterday’s 5.7% rally, Newcrest is showing signs of accelerating away from this trend line.
At this stage though, any stalling in momentum might also interest traders. A peak not far above current levels might set up divergence between price and the RSI with potential for a break below the trend line and a corrective pullback.
Ric Spooner, Chief Market Analyst CMC markets.
You can follow Ric on Twitter @ricspooner_CMC