Economic and Market Update - Week Ending 14th March
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This week has continued in the same vein as it started out. The major news has continued to be centred around MH370 the missing Malaysian Airliner, the ongoing crisis in the Ukraine and poor economic data out of China.
News out of China this week has been fairly negative and has had knock on effects to the entire area's trading as of Friday morning. As the meeting of the National People's Congress (NPC) draws to a close they released more positive data on Thursday. Industrial Output for January and February rose by 8.6% from the year before and retail sales, a key indicator rose 11.8%. Although positive these results are below expectations and raise concerns over the second largest economies ability to hit their growth target of 7.5% for 2014. The Hang Seng was down -1.36% (21473.54) by mid morning and the Nikkei 225 had taken a large dip of 3.59% (14283.79) as concerns over Japans economic outlook continues to draw attention from investors.
The crisis in the Crimea Region has not developed much further as this week has past. With the referendum taking place on Sunday, the nation will decide whether the Crimea Region will be returned to Russian control. With the G7 Nations stating that the referendum shall not be recognised it is hard to see how this situation will be resolved without major incidence. Kerry and his Russian counterpart Lavrov are due to meet for talks in London before this weekend and Russia's Prime Minister has repeatedly stated he does not wish to be part of an armed conflict, all the while more Russian troops are to be seen at key point in Crimea. Many believe that next week will see plenty of posturing from the US and EU Nations after the results of the referendum, however the majority of European countries that have major ties with Russia have publically stated that they would be unwilling to impose the level of sanctions being demanded out of the White House. At this time Russia has not made any threats with regards to retaliation against economic sanctions but it is strongly believed that they may well push back at the west if there are further calls to halt repatriating Crimea to Russian control.
The major indexes have remained mostly flat this week with very little real progress. General sentiment seems to be cautious with all eyes on this weekend and the outcome and reaction to Eastern Europe's state of affairs. All the bourses where down at the close of play on Thursday with little expected to change by the close on Friday afternoon.
FTSE 100 Closed at 6553.78 (-1.01%)
Dax Closed at 9017.79 (-1.86%)
CAC 40 Closed at 4250.51 (-1.29%)
Dow Jones Closed at 16108.89 (-1.41%)
NASDAQ Closed at 4266.42 (-1.46%)
News on the UK Inflation Report on Tuesday did very little to move the local markets. The strew of data coming out of the Bank of England seemed positive however with the general concerns of the global economy being negative, it was hard to see real improvement. Ultimately the BoE will keep its rate at 0.5% for the foreseeable future and there were remarks that QE will not be stopped any time soon. This in itself is a cause for concern for business owners however the improvements on the unemployment rate in Q4 of 2014 were a lot better than expected raising hope that the economic doldrums the UK are facing now will soon pass.
For the past few weeks there has been expectation that commodities would benefit from the current situations regarding Eastern Europe and Asia. Looked at as a safe-haven in times of uncertainty, again we have seen very little in the way of positive moves. Precious metals have seen rises steadily for the past week however nothing too out of the ordinary has happened. Gold for April 14 delivery posted moderate gains of 2% over the course of the week and reaching a high of $1,376.70 on Thursday was below many bulls predictions. Belief is that, as of next week the markets will have proper information to make their moves and it is expected that commodities as a whole should rise as investors react to the outcome of this weekend.
Main Commodities Prices as of 14/3/14
Brent Crude 106.96 (-0.4%) WTI Crude 98.22 (+0.2%)
Comex Gold 1371.00 (+1.1%) Comex Silver 21.24 (+1.3%)
Of note has been the decline in Copper 3mo Unofficial Confirmed $/mtonne. Seeing a steep decline of almost 10% over the last month concerns are mainly out of China as their stock piles of the metal are seen as an indicator to their economy and its predicted expansion. China is the major importer of the metal and at mid day trading on Friday the metal had slipped a further 0.7% to 6466 flat with further declines expected next week.
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DISCLAIMER The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Hexagon Capital Management. All market data within this release is for your general information and enjoys indicative status only. Hexagon Capital Management does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.
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