Markets are digesting the implications of a US-led trade war and further sanctions against Russia. The US has announced new sanctions as part of its ongoing effort to pressure the Russian government. Investors have been awaiting an official Russian response to a multilateral condemnation of Russia’s alleged role in the UK chemical attack. Geopolitical tension was always short-lived and a dip-buying opportunity last year. In this new higher volatility environment, it is not clear if that remains the case.
Stocks in Europe were mostly flat but caught an afternoon bid thanks to higher trading on Wall Street after a three-day losing streak. The DAX index was bolstered by rising shares of Munich RE, which upped its share buyback program. Investors perceive it as confidence but management is assuming no more profit-crushing hurricanes in 2018. In the UK, FTSE 250-listed soap-maker PZ Cussons (LON:PZC) saw shares lose as much as a quarter in value after another profit warning. A possible divestment of its Nigerian milk division might be need to streamline the business.
The British pound nudged higher on Thursday in another probe on the 1.40 level. There is nothing like a Russian boogieman to bring EU and UK political adversaries together. Consumer goods group Unilever (LON:ULVR) was centre of the Brexit debate on Thursday thanks to its decision to move its HQ from London to Rotterdam. Brexit would have clearly been a consideration. The move is really a way to avoid another unwanted takeover like that of Kraft Heinz (NASDAQ:KHC) last year.
Gold prices were under press after New White House chief economic adviser Larry Ludlow said he would 'buy the dollar and sell gold'. It should have short-term implications for gold. Kudlow was really trying to emphasise his commitment to a strong dollar and gold got caught up in the crossfire.
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