Uncertainty dominates equity and commodity markets

Friday, July 18, 2014

There is a lot of uncertainty across equity and commodity markets today. Reports that a Malaysia aircraft had been shot down over the Ukraine yesterday triggered a spike in risk aversion and raised renewed concerns over political tensions between Ukraine, Russia and the West. Furthermore, following an Israeli ground offensive in the Gaza Strip, conditions remain fairly tentative in the region.

US equity markets plunged after the report of the Malaysian aircraft crash in Ukraine. The Dow Jones Industrial Average retreated sharply by more than 160 points (0.94%), while the S&P 500 index and Nasdaq also fell sharply by 1.18% and 1.41%, respectively, with S&P 500 showing its biggest loss since April 2014. This morning, European equity markets followed the downtrend after opening the trading session on the negative side posting extended losses. The euro traded within the recent range against the US dollar, holding above the 1.35 key level.

Dow Jones Industrial Average Index

INDU Index (Dow Jones Industrial 2014-07-18 09-22-25

Asian equity markets declined sharply overnight with the Nikkei index falling more than 150 points (-1.05%), while the Hang Seng index extended recent losses and fell by 0.55%, following the general downside momentum across global equity markets. Chinese house prices rose by 4.2% y/y in June, slightly below analysts’ expectations of 5.6%.  

Energy: Brent front month futures rebounded strongly to surge above $108 per barrel in early trading this morning, as deteriorating political conditions between Russia, Ukraine and the West provided strong support to the oil market. The WTI front month contract has climbed above $103.5 per barrel, tracking strong gains in Brent.

Brent Front Month Futures

CO1 Comdty (Generic 1st 'CO' Fut 2014-07-18 09-24-04

Gold retreated near 0.5% towards $1310/per ounce in early trading this morning due to some profit taking following a sharp overnight increase. However, both gold and silver have been supported by the political uncertainty in Ukraine and Russia as well as tensions in Middle East. 

XAU- Gold Spot

XAU Curncy (Gold Spot   $_Oz )  D 2014-07-18 09-24-26

Today, the main focus will turn to the release of US market conditions and expectations from the University of Michigan/ Thomson Reuters survey. Investors will be keeping an eye on the release of the Leading index for June, while all eyes remain on the renewed uncertainty in Ukraine and Russia as current conditions are highly tentative. World leaders demanded an international investigation into the shooting down of the Malaysian airliner over eastern Ukraine.


Events for today:





Property Prices




Current Accounts




University of Michigan Survey




Leading Index


All times UK Local Time

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