Scoreboard: Russian backlash

Equity markets generally dipped overnight and commodities were weaker, although there wasn’t really any significant news. Just momentum perhaps. Data that was out was fourth tier, but it was softer and therefore insufficient to provide any lift to sentiment. For instance, a ‘flash’ estimate of the Chinese manufacturing PMI slipped in March and the European PMIs were off a touch as well. In each case we are only talking decimal point moves though, which are completely insignificant.

Global equities were generally weaker. In Europe, the Dax slumped 1.7 per cent, the CaC fell 1.4 per cent and the FTSE100 was 0.6 per cent lower. Over on Wall Street the mood wasn’t as grim, with the Dow even managing a lift at the time of writing of 0.1 per cent to 16,314. The S&P500 meanwhile fell 0.4 per cent (1860) and the Nasdaq was off 0.9 per cent.

Commodity markets were all weaker -- gold slumped $25 to $1310, silver then fell 1.6 per cent, while copper was down 0.3 per cent -- and that's with a weaker US dollar. In the crude space, WTI slipped 0.1 per cent to $99.39, while Brent was off 0.4 per cent to $106.6.

Forex markets saw the US dollar weaken and the Australian dollar rise more than 50 pips or so to 0.9132, with a session high of 0.9149, which is also a 2014 high. The euro is up about the same, all that gain occurring since 0400 AEDT, with the unit sitting at 1.3841 as I write. The British pound in turn is 20 pips or so higher at 1.6505, while the yen is at 102.26.

Rates did little overnight. The US 10-year Treasury yield is off 1 bps to 2.73 per cent, with the five-year yield at 1.72 per cent and the two-year at 0.4 per cent. Aussie futures were then up two ticks on the threes (96.94) and 3.5 ticks on the tens to 95.85.

Elsewhere, the Chicago Fed national activity index rose to 0.14 in February from -0.45, supporting most data points that are showing a rebound post-severe weather. That was it for the data. News-wise, both the interim government in Ukraine and Western countries seem intent on accelerating the Crimean crisis, showing a complete disregard for the bigger strategic picture. As if Cold War bravado is still what matters most. Incredible. Russia is now suspended from the G8, and there’s plenty of press on how Russia will now enter a recession -- and of course the S&P recently downgraded Russia’s credit rating.

In markets today, there is very little Australian data of note and there’s not much out for the rest of the region either. Our time zone will be very quiet. The only event is a speech from the deputy governor of the Reserve Bank of Australia at 1545 AEDT. Tonight the key data out of Europe includes British inflation data and the German IFO index. In the US we see house prices (currently surging), consumer confidence, the Richmond Fed manufacturing index and new home sales. The Atlanta Fed President also gives a speech.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.