Europe
Some of the risk was priced out of markets today as the apparently unfounded fears that Russia was preparing an invasion of Ukraine subsided, Gaza extended its ceasefire and ISIS lost ground in Iraq; stock markets drifted higher and gold traded lower in quiet trading.
After being down as much as 50 points on Friday, the FTSE 100 saw a strong one day reversal back above 6,600. Friday’s gain followed through today with the FTSE led higher by the miners Anglo American (LONDON:AAL) and Rio Tinto (LONDON:RIO). Ashtead Group (LONDON:AHT) led the industrials with airliners Easyjet (LONDON:EZJ) and IAG (LONDON:ICAG) also seeing some strong gains. The Financial sector fared the worst dragged down by losses in HSBC (LONDON:HSBA) and Royal Bank of Scotland (LONDON:RBS).
The geopolitical situation has calmed down for the time being and has allowed markets a relief rally but you can be sure some inflammatory comments or actions can still put the jitters back into the markets anytime.
US
Geopolitical hotspots cooled on Monday but US markets had already jumped the gun on Friday and reversed most of the week’s losses after talk of de-escalation from a Russian military official was enough to encourage some dip-buying.
Dovish talk from one of the supposed hawkish members of the Federal Reserve Stanley Fischer also helped comfort those worried about a rate-hike sooner than expected.
In a positive sign for stocks, the Dow was down over 200 points last week but turned it around with a strong reversal to close the week higher.
Fed policy concerns and geopolitical tensions have been dominating investor’s mindset in the last few weeks of trading but the focus may swing around to corporate profitability again this week ahead of retail sales numbers tomorrow and earnings from Wal-Mart, Macy’s and JC Penney in the week.
Priceline.com beat quarterly revenue estimates but missed earnings expectations and guided slightly lower for the rest of the year as the company continues to spend profits on expansion plans; recently buying a $500m stake in a Chinese travel company.
FX
The US dollar was mixed today, consolidating after making some losses at the tail end of last week.
EUR/USD was one of the bigger fallers today backing away from 1.3450 on no data.
EUR/GBP fell as the UK’s conference board leading index slightly beat expectations.
USD/CAD continues to struggle just short of 1.10 as housing starts in Canada beat expectations.
Commodities
Gold and silver backed off today as safe-haven demand was reduced, both have been directionless this year with geopolitical tensions on and off pushing gold above and below 1,300.
Crude Oil is starting to largely discount the geopolitical factors and was actually higher today despite the ease in tensions with Russia and Iraq trading on OPEC / US supply data.
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