Contrasting performance in markets either side of the Atlantic as European investors pulled out of risk assets on the imposition of wider economic sanctions against Russia while over in the US investors were supporting markets higher on encouraging data. Starting with the European session, most major benchmark equity indices sank lower, erasing yesterday’s gains as investors reacted to the announcement that the EU leaders had agreed to fresh economic sanctions against Russia. As Russia’s largest trading partner, EU investors pulled out of risk assets and the euro once again plummeted against the dollar, breaching 1.34 for the first time since November last year as it shed 0.28% throughout the session.
The single currency was last trading around 1.3370 having faced firm selling pressure throughout the day. Further details of the economic sanctions imposed on Russia are due to be made public later this week and investors will be paying close attention to this release as they analyse the impact. Markets are expected to remain under pressure throughout the remainder of the week but could likely rebound slightly as the hard facts of the sanctions may be somewhat less severe than the rumour which has prompted today’s sell-off.
Stronger performance on Wall Street was reported from the opening bell in stark contrast to the European session as bullish economic data reinforced the positive outlook for the US. Q2 GDP data showed that the US economy grew at a triumphant 4% annualised rate, outstripping the bullish expectations of 3.1% annualised growth and further solidifying the positive outlook. The stronger second quarter data prompted investors to relegate the -2.1% annualised decline in Q1 growth to an anomaly as the adverse weather conditions that prevailed at the start of the year markedly slowed industrial and manufacturing activity. Both the S&P 500 and DJIA slipped lower however, as investor attention switched to the FOMC rates decision due later this evening.