Sanctions over Russia-Ukraine clash take their toll

THE economic sanctions and counter-sanctions over the Russia-Ukraine conflict continue to weigh on markets, despite the continuation of easy money in the US and Europe.

The European Central Bank (ECB) and Bank of England have kept interest rates unchanged, but market participants fear that this would not be enough to counter the negative impact of the sanctions against Russia, Moscow's counter-sanctions and the build-up of Russian troops on the border of Ukraine, on top of worries about the ISIS extremists in Iraq and wars in Syria and Gaza.

Illustrating market worries, the 10-year yield of the bund, the German sovereign bond, has tumbled. This reflects a flight to safety and fears of an economic downturn in Germany as a result of a deterioration in trade with Russia and other countries.