Global equities trailed lower today as geopolitical tensions between Russia and Ukraine once again dominated headlines with benchmark indices on both sides of the Atlantic paring recent gains. Tensions flared after Ukraine’s president reported further incidences of Russian forces in Ukraine, bringing the situation which had subsided in recent sessions back into focus. The release of positive economic data was shadowed by heightened risk of further conflict with data in the US largely being ignored by market participants.
Initial jobless claims during the week ending August 23rd came in broadly in line with expectations, falling by 1,000 w/w to 298K while the Bloomberg consumer comfort index increased to 37.3 from 36.6 the previous week, a five week high on encouraging employment data in recent weeks. Pending homes sales data also surprised on the upside, rising 3.3% m/m in July from a 1.3% decline the previous month, well above expectations of 0.5% growth. However, the stand out release of the day was the second reading of Q2 US GDP data which was revised up to 4.2% from the preliminary reading of 4.0%. Despite the rather bullish numbers both the S&P 500 and DJIA were trading between 0.4-0.5% lower at the time of writing largely owing to Russian troop movement.
The euro subsequently gave up all of this morning’s gains as investors pulled out of the currency for fears of further intervention and sanctions against Russia. Early moves higher saw the currency rally towards 1.3200 amid fresh speculation of further ECB intervention but the euro has since traded 60 pips lower, testing yesterday’s opening levels towards 1.3160 against the dollar. Conversely, safe haven demand saw the dollar index rally higher today; pushing back above 82.50 after yesterday’s session saw levels shed 0.29% from the open after briefly touching an eleven month high.
The search for safe haven assets also saw gold prices extend gains throughout the day. After spending much of the week struggling to breach the 200 day MA at the close prices for the yellow metal rallied towards the 100 day MA at $1,295.50 before stops were triggered and gains were trimmed to below $1,290/oz towards the end of the European trading session.