A volatile week for equities and commodities

Friday, April 25, 2014

European equities plunged today, tracking sharp losses in the Wall Street, as renewed concerns about escalating crisis in Ukraine added further uncertainty to the markets. The situation between Russia and Ukraine seems to have deteriorated, triggering fresh worries about oil supplies issues in the region and a possible escalating crisis.

 

Furthermore, S&P cut Russia’s long and short-term foreign currency sovereign ratings to BBB-/A-3 from BBB/A-2 this morning, suggesting possible further downgrades if Russia’s economic growth deteriorates and the tensions with Ukraine sparks further sanctions.

 

The DAX, CAC and IBEX retreated sharply between 1.08% and 1.62%, while the London benchmark index managed to limit losses, declining by just 0.4%, mainly supported by stronger than expected UK retail sales.

 

We received fairly robust economic data from the University of Michigan/Thomson Reuters survey, which showed market confidence at 84.1 in April, beating analysts’ expectations. However, the escalating crisis in Ukraine and Russia’s downgrade issue dominated the markets, prompting investors to lock in recent gains. 

 

In London, banks were under pressure due to the absence of risk appetite. HSBC, Barclays and Lloyds fell sharply between 1.4% and 2.2%. Mining and energy stocks were trading also lower due to weaker base metals and oil prices. Brent front month futures have breached below the $110 per barrel level, while LME Aluminium has declined towards $1845, down 1.5%. 

 

It has been a fairly volatile week, including mixed economic data and US corporate earnings results, while all eyes remain on Ukraine and Russia. 

LME Aluminium

LMAHDS03 Comdty (LME ALUMINUM  3 2014-04-25 16-45-40

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