The earnings and economic data releases took prominence yesterday and sustained the demand for risky assets even as speculation is increasingly rife that EU will take less symbolic and more economically important measures to penalize Russia’s involvement in supporting the Ukrainian rebels. As discussions of the European leaders on this matter continue, the media reported yesterday that 15 individuals and 18 entities will be added to the asset freeze list, while Reuters disclosed that the state-owned Russian banks might be directly targeted by the next round of penalties; the latter would include Sberbank, Russian Agricultural Bank, VEB or VTB. Meanwhile, the US State Department spokeswoman Marie Harf accused Russia of not just indirect involvement in the conflict but also of firing across the border. What is more, the same official said that there is “new evidence that the Russians intend to deliver heavier and more powerful multiple-rocket launchers to the separatist forces in Ukraine.” On a more positive note, Russia reportedly will cooperate with the investigators of the Malaysian airplane tragedy.

In Ukraine the conflict-related worries are now increasingly aggravated by economic concerns as Prime Minister Arseniy Yatsenyuk resigned. The decision comes after the he lost the support required for implementing the austerity measures imposed by IMF in relation to the USD17 billion loan.

On another note, the IMF revised its growth projection again citing weakening macro conditions in China and US and a thriving risk of an uptick in oil prices; the institution also pointed out that the Israel-Gaza conflict is already generating fiscal and economic costs. According to the latest forecasts, the global economy is expected to advance by 3.4% in 2014 and 4% next year; in April, IMF was foreseeing growth of 3.6% and 3.9% respectively. The cut in emerging markets’ forecast was also meaningful as growth here is now expected to stand at 4.6%, 0.3 percentage points lower than previously assessed.

Away from the geopolitical concerns, the quarterly results attracted much of the investors’ interests. In US, General Motors reported a drop in Q2 profit although excluding the effect of a charge for victims’ compensation fund and other one-time effects the earnings were only marginally below expectations. Disappointing were also Caterpillar’s warning against weak demand, the homebuilder DR Horton’s earnings and Amazon’s losses. Facebook meanwhile rose to a record high after posting a 61% increase in sales. Similarly, Ford, VISA and Starbucks performed well given the positive surprises in their quarterly earnings. In Europe, Nokia, Logitech and Danske were among those delivering more than analysts were expecting, while BASF and Technip lost ground; EasyJet also underperformed after warning against London fares trends. In the emerging market space, of note is the performance of Vale after the mining company reported record iron ore production in Q2.

The economic releases were mixed. In Europe, the Services PMI came out above expectation but the French figures let down while in the US housing data was weaker than expected; June new home sales disappointed and the May figures were revised significantly lower. However, the unemployment claims data surprised positively for another week and the figure fell to the lowest in over eight years. As such, the US Treasury (UST) rates edged marginally up despite the geopolitical climate conducive to UST demand.

The Asian equities had a weaker trading session taking a respite after MSCI Asia Pacific Index recently reached the highest level since 2008.

Today’s economic calendar includes EU monetary aggregates and private loans growth, which will likely show yet again that the European banks continue to deleverage and that the deflationary risks are a bigger worry than inflation; the release of the German confidence indices will help to further assess this risks going forward. In UK in turn the market is expecting today the preliminary growth figure for Q2 to stand at 0.8% (QoQ). Finally, US is due to publish the data for durable goods orders.