Russia's downgrade weighs on market sentiment

Friday, April 25, 2014

The US equity markets traded range-bound yesterday, struggling for clear direction. The Dow Jones index ended unchanged at 16501.65 points, while the S&P 500 and Nasdaq have edged higher by 0.17% and 0.52%, respectively. Today, the release of the Markit Services PMI data as well as the results from the University of Michigan/ Thomson Reuters survey could give an insight about the current US market conditions and expectations.

The credit rating agency S&P cut Russia’s long and short-term foreign currency sovereign ratings to BBB-/A-3 from BBB/A-2 this morning. Russia’s 5Y credit default swaps rose 8 basis points to 6-week high of 272 bps following the downgrade. 

In Asia, Japan’s CPI rose by 1.3% in March, slightly below analysts’ estimates of 1.4%. The Nikkei index has rebounded from recent losses and ended higher by 24.27 points (+0.17%). However, the Hang Seng index retreated sharply by more than 300 points (-1.35%), after the recent poor Chinese economic data weighed on market sentiment.  

Japan CPI Index Y/Y 

JNCPIYOY Index (Japan CPI Nation 2014-04-25 08-56-39

European equity markets posted fresh losses in early trade this morning, as renewed tensions in Ukraine weighed heavily on market sentiment, while Russia’s downgrade also limited any possible risk appetite. The release of the UK retail sales could add some momentum to the London benchmark index.

DAX Index 

DAX Index (Deutsche Boerse AG Ge 2014-04-25 08-57-35

 

Brent front month futures climbed higher near a seven-week high at $110 per barrel as escalating tensions over Ukraine between Russia and the West trigger renewed concerns about oil supplies in the region.

 Brent Front Month

 CO1 Comdty (Generic 1st 'CO' Fut 2014-04-25 08-55-38

 

Events for today:

 

0030

JP

Mar

CPI

0930

UK

Mar

Retail Sales

1445

US

Apr

Markit Services PMI Flash

1455

US

Apr

Michigan Survey Final

 

All times UK Local Time

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