Worries surrounding the friction in Crimea have flared up again, triggering a steep drop in stock index levels on Wall Street. There have been reports that the Russia military is conducting drills close to Ukraine’s border and this has led to sentiment deteriorating further from an already shaky condition.
If the market is rattled now, things may get worse before they get better, with US Secretary of State John Kerry warning that Western governments would take ‘very serious’ steps if Russia annexes Crimea. A referendum on that issue is due this Sunday. We saw investors taking steps to mitigate some of their exposure heading into last weekend and with tensions running a little higher right now I wouldn’t be surprised if caution takes the upper hand tomorrow as well.
We saw import prices for February jumping in today’s earlier report, and that will likely be reflected to some degree in tomorrow’s Producer Price Index. A 0.2% rise is the consensus; my personal view is that it will come in a little higher. We also have the preliminary March reading of the University of Michigan’s index of consumer sentiment tomorrow, with 81.8 expected. This is normally an important indicator, but I wouldn’t be surprised if it is overshadowed by geo-political concerns tomorrow.