Good morning!

The American stocks inked only marginal gains yesterday which, as we are writing, are likely to be lost today given that futures are in the red currently. In Europe the equities are positioned for stronger losses as the short-lived amelioration in the Ukrainian crisis is taking its toll on investors’ sentiment. As the standoff extends, the economic consequences are likely to become more material even as the sanctions have been largely symbolic so far. Indeed, Bloomberg reports that Polish companies have revised downward their export growth expectations citing conflict-related uncertainties. In view of the close economic ties between Germany and Poland, and the direct exposure of the Germany companies to Russia, we would expect German companies to post a similar increase in cautiousness. Nevertheless, at the moment the DAX future is mildly in the green and positioned for over-performing the other European markets today.

In Ukraine, the effect of the agreement reached over the weekend between the European Union, the US, Russia and Ukraine (labelled Geneva agreement) proved less significant than expected as the separatist leaders refused to recognise the deal; Bloomberg reported that one of the Pro-Russian frontrunner stated “We don’t have any relation to the things that were said in Geneva […] We are not aggressors, we are on our own land.” Against this background, the Ukrainian leaders continued to doubt Russia’s intentions and accused it of continuing to stir violence. The American Vice-President will meet with the Ukrainian interim Prime minister today and the country’s acting President. Meanwhile, Russia continues pursuing its interests by looking for gas shipments; just yesterday, the Turkish Prime minister disclosed that the two countries agreed “in principle” to increase the gas transported via the Black Sea Blue Stream Line. However, the authorities acknowledged that the conflict is non-trivial for the Russian economy and the Finance Minister reinforced his earlier pessimistic expectations; he said that year-on-year growth will fall towards zero, or even turn negative, in Q2 and Q3.

The Asian markets were rather weak with Chinese stocks impacted by technical factors as new shares might soon be marketed; that is, according to Shanghai Securities News, the local regulator will meet in early May to discuss the proposed IPOs. The local indices were also impacted by the debut of an investigation of China Resources’ Chairman which triggered a sell-off of the company’s stock. The Japanese stocks were broadly unchanged even as the media reported that information has emerged on a possible decrease of corporate taxes in the upcoming years; such measures should complement the Prime Minister’s efforts of reviving the economy via monetary and economic stimulus.

Noteworthy events today include the release of European consumer confidence, US existing home sales and earnings releases; the latter include names such as Philips, Harley-Davidson, Lexmark, and McDonalds.

Have a ncie day,