Putin moves in ‘peacekeepers’ into Eastern Ukraine
The incipient rally seen yesterday has been snuffed out overnight after President Putin pushed back on US summit hopes and then recognised the two breakaway areas of the Ukraine and began “security” operations there. That dose of reality in dealing with the Russian President saw European stocks slump and with US markets closed, US index futures tumbled. Dow futures fell by 1.40%, S&P 500 futures by 1.80%, and Nasdaq futures by 2.50%, or thereabouts.
Despite the US holiday affecting liquidity, I believe the result would have been the same anyway and the selloff continues in Asia today with US index futures around 0.40% lower. Japan’s Nikkei 225 has slumped by 2.0% this morning, with the South Korean Kospi falling by 1.45%.
China markets are also under pressure, compounded by ongoing tech clampdown rumours and property sector rollover risk this week. The Shanghai Composite is down 1.25% with the more tech-centric CSI 300 tumbling by 1.60% and the Hang Seng slumping 2.30% into the red.
Singapore has eased by 0.75% with Taipei falling by 1.35%, while Kuala Lumpur is down by 0.85%. Jakarta is a relative outperformer, down just 0.20% today, while Bangkok has retreated by 1.55% and Manila by 0.75%. Australia’s ASX 200 and All Ordinaries are 1.25% lower.
With geopolitics subsuming data this week, it is hard to construct a bullish case for equities in the days ahead. European markets are likely to take more fright at the Russia “security operations” in Eastern Ukraine and fall once again this afternoon. Meanwhile, the threat of sanctions and an oil price that is screaming USD 100 a barrel will also keep US equity markets on the back foot.
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