Uncertainty in Ukraine weighs heavily on global equity markets

Monday, March 03, 2014

The growing tensions between Russia and Ukraine continue to dominate the market. European equity markets posted heavy losses today, with the DAX, CAC and IBEX retreating sharply between 2.33% and 3.44%, while the London benchmark index fell to a 2-week low, closing more than 100 points lower today.

Over the weekend, the political tensions have deteriorated after Russian President Vladimir Putin declared that he has the right to invade his neighbour. In the meantime, Ukrainian Prime Minister Arseny Yatseniuk said that Russia’s move to use military force was “a declaration of war”.

The stocks most exposed to emerging markets retreated sharply in today’s trading session. Financial stocks, banks and miners in London fell sharply as investors were prompted into profit taking to lock in recent gains after increasing tensions between Russia and Ukraine. Schroders and Aberdeen Asset Management fell sharply by 4.57% and 4.33%, respectively, following their wide exposure in Ukraine, Russia and other emerging markets.

Mining stocks also fell sharply as base metals prices retreated. Anglo American, Rio Tinto, Mondi and Antofagasta fell between 2% and 3.43%, while UK banks were also under heavy pressure due to the absence of risk appetite. 

It seems that tensions in Ukraine have been deteriorating, causing high volatility and nervous trading across the equity and commodity markets. Natural gas has retreated more than 12% in a week falling to 4.5 today from 5.2 last Monday. On the other hand, crude oil prices have rallied strongly today with Brent surging more than $2 towards $112 per barrel amid concerns over oil supply issues in Russia.  

Natural Gas Daily 3-Months Chart

NGJ4 Comdty (NATURAL GAS FUTR  A 2014-03-03 17-22-33

Dow Jones Daily 6-Months Chart

INDU Index (Dow Jones Industrial 2014-03-03 17-24-03


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