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The Russians Are Coming

Neil Davies, Head of Trading at PlutusFX, takes a look at the Russians.

Based on yesterday’s news networks, the Russians are stirring up trouble.

The effects are political, but have direct impacts across many markets. When news broke at lunchtime that RAF jets were scrambled on Wednesday after two Russian Bombers were seen off the Cornish coast, there was a small, but still noticeable move. Gold, being the obvious ‘safe haven’ spiked slightly. In the currency markets the USD also saw an expected strengthening, though nothing dramatic.  EUR/USD now standing at 1.138, though a German rejection of the Greek request for a six month extension to its eurozone loan extension clearly being the main news of the day with regard to the single currency.

Meanwhile Sterling fell against the USD, now standing at GBP/USD 1.54, down from yesterday’s high of 1.546.

Concern is increasing that Russia is extending its sphere of influence. Hopes that actions in the Crimea and Ukraine were only local appear to be disappearing. Denials of direct involvement from Putin becoming increasingly laughable. As David Cameron said, those Russian Tanks and rocket launchers in the hands of the Ukrainian rebels weren’t bought on Ebay.

Two weeks ago there were Russian Bombers flown down the English Channel. The Baltic States are concerned as an Estonian border guard has been captured. Any attack on the Baltic’s is a direct attack on all 26 NATO members and will produce a very different response than has been seen in Ukraine.

Stock markets so far appear to have shaken off any concerns, many trading near all time highs with worldwide dividend income now at an historical high, however there will be no hiding should Putin press up further.

 

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