US sanctions send Russian stock markets sliding | Economy | The …

US sanctions send Russian stock markets sliding | Economy | The …

Good morning, and welcome to our rolling coverage of the financial markets, the world economy, the eurozone and business.

Markets took the news that US interest rates could rises sooner than expected in their stride yesterday. New Fed chief Janet Yellen caught markets on the hop when she indicated that the first hike could come as early as March 2015. But better than expected US economic data ensured shares around the world bounced back and recouped all their losses yesterday.

Today all eyes are back on Russia. Russia’s Micex stock market is down 3.5% this morning while the dollar-denominated RTS index lost 4.3% in early trading. Barack Obama turned up the heat on Vladimir Putin last night by blacklisting the Russian president’s chief of staff and key business associates, and freezing the assets of a Kremlin-linked bank.

Michael Hewson, chief market analyst at CMC Markets UK, says we are set for a flat to slightly higher European open as we head into the weekend.

The only data of note is the latest UK public finances figures for February. The deficit is expected to return to the tune of £8bn.

Over in the US, a series of speeches by Fed policymakers later today could shed more light on where policy is headed. Dallas Fed President Richard Fisher due to speak in London later this evening, followed soon after in Washington by dissenter Minneapolis Fed President Naryan Kocherlakota as well as Jeremy Stein, also both voting members of the FOMC.

Concerns over China are also likely to keep investors on their toes, as Hewson observes.

Sanctions ping pong set to keep markets cautious.

Despite the strong finish yesterday markets are likely to remain cautious, despite a slightly more positive week, as Russia and the US embark on tit for tat sanctions, with the EU also set to follow suit as the standoff continues over Crimea, amidst concern over what Russia might do next.

Even allowing for a potential normalisation here, which seems unlikely, concerns remain about what is going on in China which is being reflected in the decline of the copper price, as well as the yuan with both continuing to come under pressure as markets fret about a series of minor loan defaults, from a variety of smallish Chinese companies.

The wider concern revolves around the property and real estate market with some concern that further defaults could trigger a “ripple out effect” as nervous investors pull funds from vulnerable sectors. This concern has had a notable effect on the FTSE100 which has struggled for gains all week, unlike its European peers who have had a much more positive week thus far.

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US sanctions send Russian stock markets sliding | Economy | The …

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