Week Ending Mar 14 2014 Market and Economic Update.
The global markets continued in negative territory this week as very little positive news from any of the major global economies was announced.
Continued concerns over China's growth were at the forefront of the investors' minds as even relatively positive data did little to ease the markets. With a growth target of 7.5% for 2014 very few analysts believe this is achievable. Better than expected data regarding both Industrial Output (up 8.6%) and Retail Sales (up 11.8% from the previous year) did very little to push the local indexes higher and had a negative effect on their surrounding neighbours. After a flat week the Shanghai Composite managed a slight gain closing Thursday up 1.07% at 2,019.11 and the Hang Seng down 1.3% at 21,473.54 however the SSE Comp had reversed those gains at time of writing to end up around 1.69% down for the week.
It hasn't just been China that has kept the markets quiet.
The growing concerns over the situation with Russia and the Ukraine have stifled the European and US markets. Uncertainty about the outcome of the referendum on Sunday has no doubt played on the minds of investors as a whole. With the G7 leaders making it clear that they believe the referendum is unlawful and ultimately irrelevant, there has been hardly any moves in the game of chess Putin and the rest of the UN are playing. Threats of heavy sanctions have done little to persuade the Russian Prime Minister to back down and his calls for a non violent resolution seem to be taken with a pinch of salt by the other leaders. With more troops appearing in the Crimea and Ukraine supposedly being local militia, general consensus is that the vote will go the way of Putin. What the outcome will be as of Monday is up in the air. With the US and Russia's foreign ministers meeting in London to discuss the crisis before the referendum there can be only speculation as to the resulting play the US will take and how hard they will try to get the EU to support them. Economic and financial sanctions will no doubt be discussed but with the EU's ties to Russia being far more substantial that the United States, it will be difficult for the European leaders to agree to any sanctions that may adversely affect them.
With very little movement on any of the indexes they have remained in negative territory, albeit rather flat.
Major Indexes as of 14th March:
Index % Change Close
DOW Jones (-1.41%) 16,108.89
NASDAQ (-1.46%) 4,266.42
FTSE 100 (-1.01%)
CAC 40 (-1.29%) 4,250.51
Nikkei 225 (-3.59%) 14,283.79
Hang Seng (-1.36%)
On the commodities front Gold and Silver managed to hold gains made since last week with Gold breaking $1,377.00 for April delivery. Many investors use Gold and, to a lesser extent Silver, as a hedge against market volatility. Considering the markets have been flat, the amount of cash making its way to the commodity sector is proof that investors are still waiting out on the outcome in Eastern Europe before they make their plays. This coupled with ongoing crisis's with Syria and Iran, and general concerns as a whole about the Middle East region it is surprising there has been no significant moves on the oil markets. With prices holding steady and reversing the initial gains of last week again there will be baited breath as next week starts. If Russia does a U-Turn and reacts to possible sanctions regarding its exports and does close off some of its pipelines, we can only speculate as to the market's reaction. There is every possibility of a run up in the price of oil which will have untold effects across the board.
Commodity Prices as of 14th March:
Brent Crude (-0.4%) $106.96
WTI Crude (+0.2%) $98.22
Comex Gold (+1.1%) $1,371.00
Comex Silver (+1.3%)
As the week closes out it is expected that the downward trend will continue. Asian markets were already down at mid day trading and Europe and the US will no doubt follow in their footsteps. Next week will be interesting on many levels as there are several economic indicators out of the US expected which tend to sway the markets as a whole and as the crisis in Crimea moves forward we predict some definitive movements depending on the outcome.
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