A Ukrainian MI-8 military helicopter is seen near the village of Salkovo in Kherson region adjacent to Crimea yesterday. Although Russia moved quickly to absorb Crimea, markets were reassured by Russian President Vladimir Putin’s pledge to respect Ukraine’s territorial integrity.
Europe’s main stock markets rose yesterday as investors breathed a sigh of relief despite Russia annexing Crimea amid an outcry from the West.
London’s FTSE 100 rose 0.56% to 6,605.28 points, the Dax 30 in Frankfurt added 0.67% to 9,242.55 points and in Paris the CAC 40 climbed 0.97% to 4,313.26 points.
The euro slid to $1.3910 from $1.3931 late on Monday in New York.
President Vladimir Putin addressed the Russian parliament yesterday and then signed a treaty with Crimean leaders bringing the strategic Black Sea peninsula into Russia.
Although Russia moved quickly to absorb Crimea, markets were reassured by Putin’s statements.
Yesterday’s remarks by Putin “further soothed investor concerns, causing equities to rise and safe haven gold to extend its losses,” said Forex.com analyst Fawad Razaqzada. “The tone of the Russian president’s speech was a bit less vindictive than expected and in particular less isolationalist, and the desire he indicated to maintain ties to the West without a doubt gave a boost to indices,” said Alexandre Baradez, an analyst at IG France.
Trader David White said “equities are making a tentative move higher on news that Mr Putin, for now, does not intend to carve up any more of Ukraine, putting both ease and money back into risk assets.”
CMC Markets analyst Jasper Lawler said Putin’s pledge to respect Ukraine’s territorial integrity was “on the face of it ... good news for international trade out of Ukraine including the export of energy and agricultural commodities.”
Much of the Russian gas that accounts for roughly a third of European imports flows through pipelines that cross Ukraine, and the country is also a big exporter of wheat and corn.
But White said markets were concerned however about possible further escalation in tensions after the US and European Union on Monday slapped sanctions on Putin’s inner circle after Crimea voted in a controversial referendum at the weekend to join Russia.
The White House vowed yesterday more sanctions would be levelled on Russia.
Nevertheless US stocks pushed higher.
In midday trading, the Dow Jones Industrial Average rose 0.46% to 16,321.68 points.
The broad-based S&P 500 added 0.53% to 1,868.77, while the tech-rich Nasdaq Composite Index climbed 0.92% to 4,319.13.
However uncertainty about the economic fallout from the Ukraine crisis pushed German investor sentiment to a seven-month low in March, a survey found earlier yesterday.
The widely watched investor confidence index calculated by the ZEW economic institute fell by 9.1 points to 46.6 points in March, its lowest level since August 2013, it said in a statement.
It was the third straight monthly drop and much steeper than analysts had been expecting.
“Data out today has not been terrific with German sentiment weaker than expected,” said analyst Joshua Raymond at traders City Index.
Gold meanwhile hit one-week lows as dealers took profits from recent gains. Prices slid to $1,355.75 per ounce yesterday, from $1,378.50 late on Monday.