A volatile week for global equity markets

Friday, March 14, 2014

European equity markets have been under pressure, extending losses on Friday following a volatile week including mixed economic data from the US and China. The CAC, IBEX and the London equity benchmark index retreated between 0.4% and 1.4%.

 

The political uncertainty in Ukraine continues to dominate the markets, causing fairly nervous trading conditions. The US President Obama said he still anticipates a diplomatic solution to the Ukrainian crisis. He added that he hopes the political uncertainty in the region will not harm any work with Russia on Iran.

In the meantime, following the recent update, the Russian Foreign minister Lavrov reported that Russia has no plan to invade eastern Ukraine and he added that Russia will respect the result of the upcoming referendum in Crimea.

 

On the macroeconomic front, the Eurozone’s employment increased by 0.1% in Q4 2013, while German CPI data increased by 0.5% in February in-line with expectations. The University of Michigan/ Thomson Reuters survey showed the current US economic conditions have improved to 96.1 in March, beating analysts’ estimates, while economic sentiment has slightly declined to 79.9 in March compared to 81.6 in February. Consequently, the US dollar came under pressure with the USD index retreating below 79.5. The euro has continued its strong rally toward 1.40 against the US dollar, while the British pound has been trading sideways at around 1.66. 

 

Gold rallied further in today’s trading session testing a 6-month high at $1386.6, but the yellow metal has slightly eased consolidating around the $1375 area in late trading.

 

All eyes remain to the political tensions in Ukraine. Until there is a clear resolution to the country’s political issue, we expect further volatile conditions across the equity and commodity markets. However, the softer US dollar currently provides some well-needed support in commodity prices.

XAU- Gold Daily Chart 

XAU Curncy (Gold Spot   $_Oz )  D 2014-03-14 17-23-43

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