Welcome to CrushTheStreet.com’s Weekly Market Wrap-Up!
The top news item for this edition is geo-political turmoil, specifically escalating violence in eastern Ukraine as the Kiev-backed military forces battle pro-Russian insurgents for control, significantly endangering recovery efforts for downed Malaysia Airline’s Flight MH17. Diplomatic efforts to end the conflict in light of the tragic and sensitive event of July 17th, when all 298 passengers and crew aboard the civilian airliner perished, have stalled, leaving nine dead civilians earlier this week due to increased aggression in the region.
The United States government and its intelligence agencies have consistently leveled blame on Russian-backed rebels for firing a missile at the airliner, presumably mistaking it for a Ukrainian military target. The European Union, led by Germany’s Angela Merkel, claim that Russian president Vladimir Putin is ultimately responsible for the cascading of events which culminated in the downing of Flight 17. After an impassioned speech to the United Nations by Dutch Foreign Minister Frans Timmermans, whose native Holland suffered the worst of the losses in the aforementioned flight, the EU stepped up sanctions against Russia, specifically targeting key economic sectors. Prior to the controversy, the EU was reluctant to join the U.S. in imposing sanctions due to the threat of reprisal.
Unfortunately for political and economic stability, Putin has ordered counter-sanctions to be implemented immediately, which will negatively affect food exports shipped from Western Europe, the U.S., Australia, and Canada. Even more worrisome is a build-up in military activity : NATO issued a statement that Russia has around 20,000 combat-ready troops on the eastern border of Ukraine that it could use to invade.
Reports from alternative media sources, which routinely ridiculed Kiev’s intelligence statistics as exaggerated propaganda, have placed this number much higher, at around 46,000 troops. Concerns by Eastern European neighbors, particularly Poland and Romania who have bitter memories of Soviet invasions, have been ratcheted up, wary of a resurgent and expansionist Russia within the context of a startlingly impotent response by the Obama administration.
Fears of a full-blown military escalation between Russia and the West have kept financial market activity in choppy waters, with the Dow Jones Industrial Average failing to recover ground lost in last week’s enormous sell-off. The current week has turned net-negative due to volatility in Tuesday’s market session, leaving the broad-based index in danger of going red for the year unless investor sentiment recovers.
Thursday’s price action continued the theme of uncertainty throughout most of the session, with the S&P 500 precariously close to falling below the 1,900 point mark. The precious metals complex received a substantial and somewhat expected boost, however, with gold closing up at 1,312 dollars under safe-haven demand and short covering.
Silver fell off pace slightly, losing a third of a percent due to industrial demand concerns. Palladium managed to bring a positive result, moving up seven-tenths of a percent after suffering an ugly week of consecutive losses. On the digital currency front, bitcoin remained range-bound, moving up slightly to the 580 level after earlier volatility.
And that will do it for this edition. Thanks for watching and we’ll see you next week!