The Business Times

Mostly positive signs - outside of Ukraine

Good labour report seen on Friday, with underpinnings of US economy better than thought by most people

Published Sun, Apr 27, 2014 · 10:00 PM
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LAST week, US stocks fell as traders bet Russia and the West were about to enter a punishing economic war over Ukraine - a pattern likely to continue this week.

While the market must also digest a feast of jobs, housing and manufacturing data, the fruits of Federal Reserve Board chairwoman Janet Yellen's second meeting, and a smorgasbord of earnings reports, the main course will be developments in the conflict between Russia and its smaller neighbour. Hopes that a peace deal in Geneva meant peace in Eastern Ukraine were dashed by fatal clashes throughout last week. At the weekend, the Group of Seven (G-7) nations agreed to impose new economic sanctions on Russia.

The Russian stock and bond market have already sold off on fears of economic attrition. But tit-for-tat sanctions would also hurt businesses in the European Union. Last Friday, shares of credit-card processor Visa (which garners a substantial portion of its revenue from Europe) dropped precipitously in the wake of its earnings report. German utilities and retailers will also feel the pinch if, as some analysts predict, Russia counters Western sanctions by jacking up the price of the natural gas it sells to many European nations.

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