A more encouraging start to the week for European and US markets as investor concerns regarding Crimea were eased despite a vote over the weekend indicating the region’s desire to re-join Russia. With Western powers condemning the vote as illegal, the market sell-off throughout much of the previous week was prompted by jittery investors and their worries on any impending sanctions against Russia. However, these have failed to materialise and the weekend’s vote passed without violence.
Markets seem to have been oversold last week with today’s return to form further proof. European equities started the session strong with buying momentum remaining firm throughout the day. London’s blue chip index snapped a six session losing streak as all sectors save consumer goods performed well. Risk assets received a further boost as Wall Street opened strongly, with the S&P 500 and DJIA both trading 1% higher at the time of writing as volatility represented by the VIX dropped significantly below 15 after spiking above 18 on Friday.
In a sign that calm was returning to the market, front month gold prices erased the early gains which had seen the yellow metal trade towards $1,392 in early morning trade as it lost 1% to test Friday’s open towards $1,370/oz. Underlying concerns regarding slowing Chinese growth remain present and if the situation between Russia and Ukraine deteriorates further we could see gold prices target $1,400/oz in the coming weeks.