Scoreboard: Pain in Ukraine

Instability in Ukraine added uncertainty, but Wall Street managed to push higher on light volumes.

Markets were comparatively quiet overnight, with Europe still closed and little in the way of economic data to inspire. I suspect that investors are waiting for earnings results this week in the US and watching the increasingly erratic events in the Ukraine closely. The major powers on all sides have shown little genuine willingness to resolve things here and so the crisis goes on -- and the country descends further into chaos. Putin has suggested that Russian troops may enter Eastern Ukraine if things deteriorate further. Europe and the US for their part could have ended it much sooner with a little realism and pragmatic policy making rather than all the cold war bravado. So far markets aren’t too fussed though.

Equities pushed higher on Wall Street, although volumes were light. At the close, the S&P500 was up 0.4 per cent (1871), the Dow was up 40 points (16449) and the Nasdaq was 0.6 per cent higher (4121). By sectors gains were broad-based, with the key outperformers in the energy, telecommunications, health and tech space.

Commodities had a mixed session, most of the metals and crude were little changed from zero though. Brent rose 0.2 per cent to $109.9, WTI was up 0.1 per cent to $104.4. In the metals space, gold fell $5.4 to $1288, silver was down 0.9 per cent and copper was flat.

Forex markets generally saw the US dollar strengthened a bit, with euro down just over 20 pips to 1.3795 and sterling off about 15 pips to 1.6793. The Australian dollar is little changed at 0.9328, seemingly ignoring the government’s comments on the Reserve Bank and the Australian dollar. The government would be well advised to leave it alone, the ALP tried -- succumbed to lobbying -- but ultimately failed and damaged the economy in the process. Seeing this, it would be extremely foolish for the coalition to follow the same path.

Rates ended little changed, maybe a little lower through to the mid curve with the 2-year yield down about 2 bps to 0.38 per cent and the 5-year off about the same to 1.719 per cent. The 10-year yield was pretty much unchanged at 2.71 per cent.

Elsewhere, data was minor and the only releases out were from the US and lower tier. Specifically, we saw the Chicago Fed National Activity Index slip to 0.2 in March from 0.53 the month prior in a signal that growth moderated in the month. The leading indicators however suggest that growth will accelerate, the index rising 0.58 per cent in March following a 0.5 per cent lift.   

In markets today, it should be a fairly quiet one locally what with Europe closed and US markets not really doing much. There is little data today and the only data piece domestically this week will be the consumer price figures tomorrow (1130 AEST). The result is going to be fascinating following the Treasurer’s apparent displeasure with the Reserve Bank’s neutral stance and the effect this is having on the dollar. Especially as consumer prices are expected to rise by a solid 0.8 per cent in the March quarter, which would bring the annual rate to 3.2 per cent - above target.  The core measures (trim and weighted median) are expected to rise by 0.7 per cent in the quarter and by 2.9 per cent over the year.

That’s the key data for Australia. Looking abroad, we see eurozone construction output tonight, while US data includes the Richmond Fed manufacturing index and existing home sales.

For the rest of the week se don’t see any major, payrolls variety, releases but there are a few that a worth watching nevertheless. For the US it’s new home sales (Wednesday) and durable goods orders (Thursday), while for Europe we see the German IFO survey. 

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