Risk appetite seems to have recovered in recent trading days, boosting global equities despite the ongoing tension between Russia and the West. Asian equities chalked up gains, with the Nikkei ending up 1.8% higher for the day as Japanese traders returned to their desks and banks reopened after Friday’s holiday.
Market watchers are still wary about the ongoing tension between Russia and the West, which is mainly comprised of the United States and the European Union. Last week, the US announced a list of banned Russian officials and decided to freeze their assets. Russia responded with their own list of banned US officials, including McCain and Boehner.
Another round of sanctions could be doled out this week from both sides, if neither shows signs of giving in. However, analysts cautioned that the West might stop short of implementing large-scale economic sanctions on Russia since this might backfire on their own energy supply and economic performance. In particular, Europe has much at stake since Russia is its single-largest energy supplier and is its third largest trade partner next to the US and China.
Global Equities Outlook
With that, US and EU leaders are expected to pursue more peaceful negotiations with Russian President Putin this week as they are probably not willing to put their own economic growth on the line. This explains why equity selloffs failed to see momentum at the start of Monday’s trading and traders decided to book profits off key levels.
Earlier today, France reported stronger than expected manufacturing and services PMIs, helping shore up European equities. However, global equities performance still lagged as Germany’s manufacturing and services PMIs fell short of expectations. There are no major reports lined up from the US today so it should be all about risk sentiment driving global equities and the US stock market.
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