Sanctions Loom on Data-less Monday

The big news around European circles today was the sheer lack of any news to grapple upon as no important data was released until North America joined the lighted side of the globe. Asian markets started the week with no notable data releases, and Europe blindly followed. As for the North American data, the US Flash Markit Services PMI registered a 61.0, remaining unchanged from last month’s revised figure therefore matching the highest reading on record; while Pending Home Sales took a turn lower and fell 1.1% when a slight uptick was expected. The miss in Pending Home Sales may appear daunting as any red figure generates anxiety, but it is important to note that last month’s 6.0% increase was substantial and pullbacks after strong data previous is fairly common.

In response to the US data releases most equity markets took a turn lower, but the reaction was rather sanguine. European markets, which were mildly negative for the majority of the day, fell enough to make a red finish almost certain, while US equities had a similar reaction though it has more time to recover. Currency markets were even less enthralling with the standout being the GBP/USD taking a run at, and reaching, the 1.70 figure. The psychological barrier has proved to be a challenge to overtake though as it has turned away two attempts through the first half of North American trade.

Meanwhile, the socioeconomic drama surrounding Ukraine continues to linger as Europe and the United States are preparing even harsher sanctions against Russia for their involvement with Ukrainian separatists. The sanctions, including closing capital markets to Russian state banks, are set to be agreed upon tomorrow and could spur a flight to safety. Granted, investors are becoming accustomed to the Ukrainian narrative and markets are reacting less conclusively to developments in and around the area, but the introduction of more robust sanctions could garner a lot of attention and kick-start a risk-off move.