Back
10 Mar 2014
EMEA EM Express: Stocks under pressure as Ukraine tensions persist
FXStreet (Łódź) - Assurances both from the Russian as well as the Ukrainian side that military conflict is unwanted and that a peaceful solution to the situation in Crimea will be sought, haven't calmed the markets over the weekend. As long as no resolution is in place woes will persist.
Meanwhile, due to a bank holiday in Russia and Ukraine, many stocks there remain closed today so for news on their performance we will have to wait till tomorrow. Last week Russian stocks posted the worst weekly losses in under two years.
One of the companies which has already suffered a blow from the tensions between Ukraine and Russia is a Ukrainian diary producer and distributor Ukrproduct Group. Falling consumer confidence and the drop in the hryvna severely affected its revenues, while the shares were down by 4.8% today.
“The unstable political and economic situation, as to be expected, is having an adverse effect on businesses throughout Ukraine including Ukrproduct Group,” according to the company's official statement.
"Overall, sales have also been adversely affected as higher unit costs due to a currency devaluation of the hryvna and sustained high raw milk prices has necessitated the consumer price increases."
During the weekend, various officials discussed the situation in Ukraine with German Chancellor Angela Merkel holding telephone conversations with Russian President Vladimir Putin as well as US President Barack Obama. Both the the German and US leaders said they would not recognize the outcome of the referendum on Crimea whiioch they consider illegitimate.
Ukraine Prime Minister Arseniy Yatsenyuk is due to hold a meeting with Obama at the White House on Wednesday on how to peacefully resolve the situation in Crimea. Meanwhile, United States Secretary of State John Kerry was invited today by Russian Foreign Minister Sergey Lavrov to provide consultations on Ukraine, but the visit has been postponed.
The BBH Global Currency Strategy Team believe that for the rest of the week “the ruble and Russian stocks are likely to remain under pressure,” ahead of the referendum this weekend on whether Crimea should join the Russian Federation or remain part of Ukraine.
Economic data
Wage growth in Romania's private sector increased by 5.7% in January, which is the highest reading recorded since 2011 and up from December's 4% growth.
The ING team of analysts, who rose their Romanian GDP forecast for 2014 from 2.3% to 2.9% last week comment: “The details of the wage data for the private sector are unambiguously positive as growth picked up in both the industrial and the service sector. However, we take supplementary comfort from the fact that the acceleration looks rooted in the non-tradable sector, a sector which has only recently showed some slight signs of recovery.”
Today the Czech Republic released CPI data which pointed to a slight pickup in inflation from 0.1% in December to 0.2% in January. February Unemployment numbers, also published on Monday, showed that the Unemployment Rate remained stable at 8.6%.
Turkish Industrial Production surprised to the upside, rising by 7.3% in January, up from 7.1% the previous month and beating expectations of 2.9% growth.
Technicals
The daily FXStreet Trend Index for USD/RUB is slightly bullish, with the OB/OS Index neutral. RSI was neutral at 70.1279 at the last close. Daily 2-StDev Volatility Bandwidth is expanding at 5257 pips, with ATR (14) expanding at 4005 pips. The 1D 200 SMA is at 33.1222, while the 1D 20 EMA is at 36.0440.
The USD/UAH daily FXStreet Trend Index is slightly bullish, with the OB/OS Index neutral.
Meanwhile, due to a bank holiday in Russia and Ukraine, many stocks there remain closed today so for news on their performance we will have to wait till tomorrow. Last week Russian stocks posted the worst weekly losses in under two years.
One of the companies which has already suffered a blow from the tensions between Ukraine and Russia is a Ukrainian diary producer and distributor Ukrproduct Group. Falling consumer confidence and the drop in the hryvna severely affected its revenues, while the shares were down by 4.8% today.
“The unstable political and economic situation, as to be expected, is having an adverse effect on businesses throughout Ukraine including Ukrproduct Group,” according to the company's official statement.
"Overall, sales have also been adversely affected as higher unit costs due to a currency devaluation of the hryvna and sustained high raw milk prices has necessitated the consumer price increases."
During the weekend, various officials discussed the situation in Ukraine with German Chancellor Angela Merkel holding telephone conversations with Russian President Vladimir Putin as well as US President Barack Obama. Both the the German and US leaders said they would not recognize the outcome of the referendum on Crimea whiioch they consider illegitimate.
Ukraine Prime Minister Arseniy Yatsenyuk is due to hold a meeting with Obama at the White House on Wednesday on how to peacefully resolve the situation in Crimea. Meanwhile, United States Secretary of State John Kerry was invited today by Russian Foreign Minister Sergey Lavrov to provide consultations on Ukraine, but the visit has been postponed.
The BBH Global Currency Strategy Team believe that for the rest of the week “the ruble and Russian stocks are likely to remain under pressure,” ahead of the referendum this weekend on whether Crimea should join the Russian Federation or remain part of Ukraine.
Economic data
Wage growth in Romania's private sector increased by 5.7% in January, which is the highest reading recorded since 2011 and up from December's 4% growth.
The ING team of analysts, who rose their Romanian GDP forecast for 2014 from 2.3% to 2.9% last week comment: “The details of the wage data for the private sector are unambiguously positive as growth picked up in both the industrial and the service sector. However, we take supplementary comfort from the fact that the acceleration looks rooted in the non-tradable sector, a sector which has only recently showed some slight signs of recovery.”
Today the Czech Republic released CPI data which pointed to a slight pickup in inflation from 0.1% in December to 0.2% in January. February Unemployment numbers, also published on Monday, showed that the Unemployment Rate remained stable at 8.6%.
Turkish Industrial Production surprised to the upside, rising by 7.3% in January, up from 7.1% the previous month and beating expectations of 2.9% growth.
Technicals
The daily FXStreet Trend Index for USD/RUB is slightly bullish, with the OB/OS Index neutral. RSI was neutral at 70.1279 at the last close. Daily 2-StDev Volatility Bandwidth is expanding at 5257 pips, with ATR (14) expanding at 4005 pips. The 1D 200 SMA is at 33.1222, while the 1D 20 EMA is at 36.0440.
The USD/UAH daily FXStreet Trend Index is slightly bullish, with the OB/OS Index neutral.