Markets take in stride Crimea vote to join Russiahttps://indianexpress.com/article/business/market/markets-take-in-stride-crimea-vote-to-join-russia/

Markets take in stride Crimea vote to join Russia

Investors said much of the Ukraine-related selling in equities happened in the run up to Sunday’s vote.

India
General view of the trading floor of Frankfurt stock exchange on Monday. Reuters

World stocks rose from a one-month low on Monday while the yen and the prices of US Treasuries fell after Sunday’s referendum in Crimea passed without major violence, reducing demand for safe-haven assets.

The yen extended losses after US President Barack Obama on Monday imposed sanctions on 11 Russians and Ukrainians blamed for Russia’s military incursion into Crimea, including two top aides to Russian President Vladimir Putin.

The European Union earlier had also imposed sanctions including asset freezes and travel bans on 21 officials from Russia and Ukraine.

Wall Street opened sharply higher on Monday, up more than 1 per cent, rebounding from a steep decline in the previous week as concerns eased over the situation in Crimea, even as the region voted to join Russia.

Advertising

“This is a classic example of too much fear and anxiety having been in the market. Last week’s decline more than discounted any bad news that could be reasonably expected to come out,” said Donald Selkin, chief market strategist at National Securities in New York.

“I don’t think anyone believes that this could escalate into a shooting war or the US committing troops.”

The geopolitical tension weighed on equities last week, with the S&P 500 suffering its biggest weekly loss in seven and the CBOE Volatility index jumping to its highest since early February on Friday.

World stocks also rebounded sharply from an one-month low as risky assets bounced. The MSCI world equity index , which tracks shares in 45 countries, rose 0.8 per cent on the day, having hit a one-month low on Friday.

The euro, which had come under pressure after data showing euro zone consumer inflation dropped back in February to the level that triggered a surprise interest rate cut in November, recovered losses to hit session highs against the dollar.

Investors said much of the Ukraine-related selling in equities happened in the run up to Sunday’s vote.
European stocks rose 1 per cent and the broader Euro STOXX 600 both rose around 1.1 per cent. Emerging stocks added 0.5 per cent.

With the Crimea vote out of the way, investors are now focusing on this week’s Fed policy meeting, at which the central bank is expected to continue to reduce the size of its bond purchase program but alter its forward guidance.

The Fed previously said that it would not raise interest rates until joblessness fell to at least 6.5 per cent, a pledge that policymakers thought would hold until at least mid-2015. But that rate hit a five-year low of 6.6 per cent in January, before rising to 6.7 per cent in February.

US crude oil rose further on Monday, gaining for a third session in a row. US crude oil fell 0.4 per cent to $98.52 a barrel.