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Risk-off mentality ahead of Crimean referendum

In mid-morning trading the FTSE 100 is down 20 points as the UK equity market tries to keep its head while the rest of Europe sinks.

Yesterday’s selloffs in both the US and Asia have set the template for European traders this morning, as the distinct whiff of traders' risk-off mentality has been evident from the start. Traders are only too aware that the EU may be forced to take sanctions over Russia’s recent actions, after no doubt hoping to draw the line at disapproving comments, following this weekend’s referendum in Crimea. Considering the region’s dependence on Russian oil and gas and the fragile state of the EU’s recovery, this is a high stakes game of poker, and you suspect that Vladimir Putin realises how strong his hand is. 

Last night BP was finally allowed off the US naughty step, having been forced to sit on the sidelines after the Deepwater Horizon disaster in the Gulf of Mexico in 2010. It will be interesting to see how keen the company will now be to bid for projects in the US after such an expensive lesson both financially and in terms of PR. 

Regardless of how rocky the equity markets might be you can still drown your sorrows, and judging by the 8.5% increase in first-half profits at JD Wetherspoon’s they are one of the most popular destinations for doing just that. 

On its first day of trading on the London Stock Exchange, BooHoo.com has seen shares up by more than 50% in the first hour of trading, no doubt more than enough to cheer them up.

Although the selloff in equities has been less harsh in the US, last night’s moves will have ensured that momentum has been taken out of February's charge higher. This week has seen equity markets put the brakes on as the haggling over Crimea has intensified and this weekend’s referendum should ensure that the waters are kept suitably muddy. Although events in the Black Sea might be getting headlines, the flow of economic data out of China is painting an ever more conclusive picture of an economy that is changing down gears. These two factors have seen US traders forced to look outside their own borders as global issues begin to eat into market confidence.

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