The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Asian ETF’s buckled under selling pressure where most were down between 0.5% - 2.3%, except for MSCI Thailand gaining 0.9%.
US stocks tumbled despite the better-than-expected macroeconomic data overnight. Personal income, manufacturing and construction spending are all up for the month of January. Yet, investors sold-off US equities and took refuge in safe haven assets such as gold and US Treasures due to the Ukrainian conflict.
There are questions about whether the Russian-Ukrainian crisis will cause systemic risks in the markets. The focus is on the supply of crude oil from Russia and whether this could drag on, which will add further stress on the developed countries to support Ukraine.
At this point, it is clear that the situation is unwelcomed and more likely the markets has been overextended after coming off the lows in January and taking the opportunity to retrace. Investors have been digesting the information that there is a slowdown in the global economy. Chinese manufacturing data showed weakness in the sector, even the property market is cooling.
Meanwhile, manufacturing for Indonesia showed marginal improvements in February, from 50.5 to 51. Natural disasters, floods and volcanic eruption, dampened domestic growth while new orders for exports improved. India’s HSBC PMI also showed a pick-up in activity. The expansion in activity is a turnaround after contraction for most of last year. The support has been an improvement in the external demands.
Gold, on the other hand, pushed up higher to $1350 – I have been watching. The momentum for the precious metal remains and a further upside is possible if it closes above $1350 today. The only disappointment is the lack of movement in the dollar index during this shift to flight to safety