Global equity markets reversed yesterday’s positive performance today as geopolitical risk events curbed risk appetite and prompted mixed trading activity in the dollar. After the US announced its most far reaching sanctions against Russia late last night, both the rouble and stocks listed in Moscow plummeted lower as the demand for safe haven assets improved. Major European equity indices opened lower as a result of the cautious mood and proceeded to spend the entire day in negative territory as details of the sanctions emerged.
Safe haven assets were supported higher with the dollar index building on support around 80.50, rallying as high as 80.594 before settling around 80.570 towards the end of the European session. Spot gold prices managed to build on support around yesterday’s close after a sharp sell-off at the start of the week. Intraday gains pushed as high as $1,308/oz before prices pulled back to just below the 100 day MA.
Wall Street tracked the European session lower despite bullish Q2 earnings from Morgan Stanley which market participants hoped would have set the tone for the coming session. At the time of writing both the S&P 500 and DJIA were trading between 0.1-0.2% lower. Market participants will likely see out the remainder of the US session with increased caution with tomorrow’s trading session seeing a further reduction in risk appetite. Macro data today was mixed, with June housing starts missing expectations of 1020K, increasing by 893K while conversely, initial jobless claims came in better than expected, falling to 302K w/w against expectations of a slight increase from 305K to 310K.