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Traders rush to defensive stocks
It may have been premature to assume that the Ukraine/Russian political concerns had faded, and the rush into defensive stocks on the UK benchmark today was testament to that. The biggest movers were in the non-cyclical sectors and included Sainsbury's, Diageo and Reckitt Benckiser Group.
Despite oft-reported struggles to pay down billions in debt, Evraz, the Russian steelmaker part-owned by billionaire Roman Abramovich, jumped on a broker upgrade today and seized the top spot on the FTSE, adding 4.55%.
Shares in Hargreaves Lansdown were a significant beneficiary of the UK budget, but the recent selloff in equity markets has seen investors head for the exits. The stock took the bottom rung of the FTSE ladder today, falling 4.5%, and month-to-date has shed over 18% in total.
Citigroup posts solid Q1 figures
Citigroup’s earnings release was in stark contrast to that of JPMorgan. A 4% rise in quarterly profits saw earnings per share come in at $1.30 against an expectation of $1.14. Investors scrambled to buy in, sending the stock up 4% in early trade. Despite weakness in mortgage refinancing and bond trading, the bank managed to bring in revenue of $20.1 billion; higher than consensus forecasts; however, this was still some 2% lower year-to-date. Stricter financial regulation, along with lower interest rates, has weighed, and the less-than-stellar global economic growth is still pertinent.
A protracted move down through the 16,000 level was too much of an ask today. The Dow Jones has found a bid at this metric, aided and abetted by the bullish retail sales data.
US retail sales came in ahead of expectations and the largest gain in one-and-a-half years could indicate that the excuse of poor weather is now behind us.
Gold hits three-week high
A three-week high for gold was established early on as investors sought the safe haven of the metal over the uncertainty of risky assets. Some dollar strength has returned to the market which has served to cap gold at $1327/oz. Any break through here puts it on a trajectory towards $1340/oz.
Given that Ukraine is a major exporter of wheat, it should come as no surprise that the potential disruptions to supply have seen the price spike upwards. Any indications that the tensions between Ukraine and Russia are escalating is likely to see current moves garner additional momentum. Cold weather conditions in the US and added potential for crop damage are also helping to support prices around the $6.70 per bushel.
US dollar outperforms G10 currencies
The dollar has outperformed all G10 currencies today, in the main owing to the better retail sales data. The European Central Bank attempts to talk down the euro had something of a muted effect. It seems that, at this juncture, market participants do not fully believe that any form of easing is imminent from Mario Draghi. If anything, future EUR/USD exchange rates lie mainly within the domain of the Federal Reserve.