Scoreboard: Referendum row

Global stocks slumped despite upbeat US data as Germany and the US threatened action over Crimea’s impending referendum.

Markets overlooked generally positive economic data out of the US to focus instead on lingering concerns over China and tensions on the Crimean peninsula. The US and Germany have ramped up the pressure warning that if a planned referendum on cessation goes ahead this weekend then “very serious” steps would be taken. Approximately 58 per cent of Crimea’s two million people are Russian (about 24 per cent are Ukrainian) and so far it seems they are overwhelmingly in favour of joining Russia.

Yet German Chancellor Angela Merkel said that "If Russia continues with its policy of the past weeks, then this wouldn't only be a disaster for Ukraine. We as neighbouring states would also regard this as a threat…[it] would also, and I am deeply convinced of this, massively damage Russia economically and politically." Instead Merkel wants to see the referendum called off and a contact group established to negotiate an outcome.

As for the data, US retail sales came in stronger than expected, rising 0.3 per cent in February compared to the expectation of 0.1 per cent. Similarly, new jobless claims fell again, down to 315,000 in the week to March 7 from 324,000, in a further sign of the economy gaining momentum after severe weather.

Global equities fell, and hard. In Europe, the Dax is off another 1.9 per cent, the CaC is down 1.3 per cent and the FTSE100 is off 1 per cent. US markets too have been hit hard. At the time of writing, the S&P500 is down 1.3 per cent to 1844, the Dow is then off 239 points to 16,100, while the Nasdaq is 2.7 per cent lower (4249). Most sectors were weaker, with the key underperformers technology, industrials and consumer services.

Rates saw US Treasuries rally hard overnight, with the 10-year Treasury yield slumping about 10 bps to 2.64 per cent, which is the biggest move since November. The five-year yield is at 1.518 per cent and the two-year is at 0.326 per cent.

Commodities saw mixed action. Gold was higher, although only marginally at $1372. Copper and silver both weakened, down 1.4 per cent and 0.8 per cent respectively. On the crude front, price action was also mixed. WTI rose 0.3 per cent ($98.2) while Brent slumped 1.3 per cent ($106.9).

Forex markets saw some interesting action in the euro. The unit initially pushed higher and saw a high of 1.3966 (up 66 pips). At that point we saw the currency slump after the European Central Bank head said that the bank may have to consider further easing measures to prevent the build-up of deflationary pressures. The euro fell nearly a big figure and currently sits at 1.3859. Elsewhere, the British pound is down about 50 pips to 1.6611 and the Australian dollar is down about 30 pips to 0.9023. The yen is otherwise at 101.6.

Elsewhere, Australia’s jobs surge yesterday shows pent-up demand for labour being released. Data is volatile and the recent strength in 2014 no doubt corrects for excessive weakness last year. But it’s a great outcome -- it dispels myths of economic weakness and is also consistent with recent indicators showing another upswing in growth (following a confidence-induced lull in 2013).

Similarly, Chinese data yesterday continues to show the economy powering ahead. Retail sales surged 11.8 per cent over the year to February (13 per cent previously), industrial production spiked another 8.5 per cent (9.7 per cent previously) and fixed investment was very strong, rising almost 18 per cent over the year. No sign of this economic weakness that some obsess about.

In markets today, there isn’t a lot of data and even tonight it’s quite light. The main releases include US producer prices, the University of Michigan’s consumer confidence index and we see a speech from Dallas Fed President Richard Fisher. In the UK we see the trade figures and construction output.

Have a great day…

Scoreboard: Ultimatum

Global stocks tanked as Germany and the US threatened action over Crimea’s referendum.

Global stocks tanked despite upbeat US data as Germany and the US threatened action over Crimea’s referendum.

Markets overlooked generally positive economic data out of the US to focus instead on lingering concerns over China and tensions on the Crimean peninsula. The US and Germany have ramped up the pressure warning that if a planned referendum on cessation goes ahead this weekend then “very serious” steps would be taken. Approximately 58 per cent of Crimea’s two million people are Russian (about 24 per cent are Ukrainian) and so far it seems they are overwhelmingly in favour of joining Russia.

Yet German Chancellor Angela Merkel said that "If Russia continues with its policy of the past weeks, then this wouldn't only be a disaster for Ukraine. We as neighbouring states would also regard this as a threat…[it] would also, and I am deeply convinced of this, massively damage Russia economically and politically." Instead Merkel wants to see the referendum called off and a contact group established to negotiate an outcome.

As for the data, US retail sales came in stronger than expected, rising 0.3 per cent in February compared to the expectation of 0.1 per cent. Similarly, new jobless claims fell again, down to 315,000 in the week to March 7 from 324,000, in a further sign of the economy gaining momentum after severe weather.

Global equities fell, and hard. In Europe, the Dax is off another 1.9 per cent, the CaC is down 1.3 per cent and the FTSE100 is off 1 per cent. US markets too have been hit hard. At the time of writing, the S&P500 is down 1.3 per cent to 1844, the Dow is then off 239 points to 16,100, while the Nasdaq is 2.7 per cent lower (4249). Most sectors were weaker, with the key underperformers technology, industrials and consumer services.

Rates saw US Treasuries rally hard overnight, with the 10-year Treasury yield slumping about 10 bps to 2.64 per cent, which is the biggest move since November. The five-year yield is at 1.518 per cent and the two-year is at 0.326 per cent.

Commodities saw mixed action. Gold was higher, although only marginally at $1372. Copper and silver both weakened, down 1.4 per cent and 0.8 per cent respectively. On the crude front, price action was also mixed. WTI rose 0.3 per cent ($98.2) while Brent slumped 1.3 per cent ($106.9).

Forex markets saw some interesting action in the euro. The unit initially pushed higher and saw a high of 1.3966 (up 66 pips). At that point we saw the currency slump after the European Central Bank head said that the bank may have to consider further easing measures to prevent the build-up of deflationary pressures. The euro fell nearly a big figure and currently sits at 1.3859. Elsewhere, the British pound is down about 50 pips to 1.6611 and the Australian dollar is down about 30 pips to 0.9023. The yen is otherwise at 101.6.

Elsewhere, Australia’s jobs surge yesterday shows pent-up demand for labour being released. Data is volatile and the recent strength in 2014 no doubt corrects for excessive weakness last year. But it’s a great outcome -- it dispels myths of economic weakness and is also consistent with recent indicators showing another upswing in growth (following a confidence-induced lull in 2013).

Similarly, Chinese data yesterday continues to show the economy powering ahead. Retail sales surged 11.8 per cent over the year to February (13 per cent previously), industrial production spiked another 8.5 per cent (9.7 per cent previously) and fixed investment was very strong, rising almost 18 per cent over the year. No sign of this economic weakness that some obsess about.

In markets today, there isn’t a lot of data and even tonight it’s quite light. The main releases include US producer prices, the University of Michigan’s consumer confidence index and we see a speech from Dallas Fed President Richard Fisher. In the UK we see the trade figures and construction output.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.

is a leading market economist.

Follow @AdamCarrEcon on Twitter.