Market Update

The crisis in Ukraine continues to influence markets; however, what is noteworthy is that these events bring to light the ‘character’ of the players involved. Vladimir Putin is emerging as an old style authoritarian, with the ultimate goal of recapturing Soviet power, one step at a time. Putin appears to be driving with his people’s pride as his fuel. That will mean that he will not give-up an inch unless it appears as a victory to Russia.

The EU is what it is, a conglomerate of countries pulling in different directions without a clear direction. On one hand the EU has promised and has signed to uphold Ukraine sovereignty, but that would imply going to war with Russia. Definitely at such high stacks diplomacy is preferred, but diplomacy, like poker, is a game of bluff and strong hands. The EU appears to have neither.

The US is just coming out of war that was a complete mess. The US attacked a country after having fabricated evidence, which later was not even found. They have spent billions trying to rebuild that country but instead have left a mess behind. They have tried to stamp their influence in Afghanistan, Egypt, Libya, Syria… but none of these countries appear to be better off. Ukraine seems just another unwanted pain that they are required to assist.

I believe that Russia has smelt weakness in its traditional foes and at the cost of changing the world order is moving it pieces. The other players, still celebrating their cold war victory are reluctant to throw the dice while Russia is throwing straight sixes. Unfortunately I believe it will be difficult to the West to win this one especially when the attitude is rather to minimize losses.

Elsewhere…

US

A rebound in Apple pushed US stocks higher yesterday following a recent weakness in US equity markets. Apple shares increased by over 3 percent, the most actively traded stock on the Nasdaq, following an increase in price targets by several analysts.

Several wireless and cash-less payments companies rose during the trading session following the announcement by Apple of Apple Pay, a mobile payment service. On the other hand, eBay, owner of PayPay, fell 3.1 percent as analysts perceive the new service as a threat.

Energy shares were amongst the biggest losers as oil prices continued to decline.

The Recent weakness in US Stock stems from concern that the Federal Reserve could raise interest rates earlier than investors expect. Higher rates would raise borrowing costs for individual companies.

Asia

Asian stocks remained flat early this morning. The MSCI Asia Pacific Index, a benchmark for the Asian stock market, lost 0.1 percent after rising as much as 0.2 percent during the session. China’s consumer price index rose 2 percent last month compared to a year earlier. Economist expected a 2.2 percent gain. Slackening imports and declining commodity prices are pointing to an underlying weakness in Chinese demand.

Meanwhile Japanese stocks continued their rally as the yen continued to weaken against the dollar. The Topix increased 0.3 percent, at the close in Tokyo, erasing its loss this year and closing at its highest since 2008. The currency weakness against the dollar is improving export prices and will help improve overall sales.

Europe

European stocks advanced following four days of negative performance as investors await data on US employment.

Air France gained 2 percent as the Company said that it planned to grow earnings by as much as 10 percent a year up to 2017.

Scottish nationalist lost some ground for independence in an opinion poll a week before a referendum that could lead to a breakup of the UK. The latest poll put the No lead at 6 percentage points when excluding undecided voters. The No campaign has 53 percent against the Yes campaign’s 47 percent. The poll gives some reassurance to markets following concerns regarding the pound.

Commodities

Gold fell towards a 3 month low as investors on the back of expectations of higher US interest rates, a strengthening dollar and easing tension in Ukraine.

West Texas Intermediate traded near an 8 month low amid speculation the rising US crude output will add to excess supply. The potential for oversupply and global economics are not supporting demand. Oil prices are expected to continue decreasing next year as US production reaches a 45 year high.