The stock market experienced a moderate selloff on Monday as the situation in the Ukraine escalated.
March came in like a bear – as the Russian bear came into Crimea, causing a global stock market slide. The fact that Russian stocks sank as the situation escalated did not seem to matter, as everything else seems to be going wrong with that nation’s economy (RSX).
The exchange rate for the ruble sank to approximately 51 per euro and February’s HSBC Russia Manufacturing PMI remained in contraction for the fourth consecutive month, with a reading of 48.5 – its second-lowest since July of 2009. January’s reading of 48.0 was the lowest since that point. Russia’s PMI has been in the contractionary range (below 50) for seven of the eight past months. The Russian Central Bank was forced to raise interest rates by 1.5 percent to 7 percent. The Russian bear is obviously hungry, so it wants to eat Crimea.
The Dow Jones Industrial Average (DIA) lost 153 points to finish Monday’s trading session at 16,168 for a 0.94 percent decline. The Dow finished the session above its 50-day moving average of 16,155. The S&P 500 (SPY) fell 0.74 percent to 1,845.
The Nasdaq 100 (QQQ) dropped 0.75 percent to finish at 3,668. The Russell 2000 (IWM) declined 0.56 percent to end the day at 1,176. U.S. Dollar Erases Losses
In other major markets, oil (USO) jumped 2.12 percent to close at $37.52.
On London’s ICE Futures Europe Exchange, April futures for Brent crude oil advanced $2.10 (1.93 percent) to $110.73/bbl. (BNO).
April gold futures climbed $28.70 (2.17 percent) to $1,350.30 per ounce (GLD).
The transportation sector skidded off the side of the road during Monday’s trading session, as the Dow Jones Transportation Average fell 0.62 percent to 7,302, dipping just below its 50-day moving average of 7,303 (IYT).
In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks fell as the yen strengthened to 101.27 per dollar during Monday’s trading session in Tokyo, as a result of the situation in the Ukraine. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average sank 1.27 percent to 14,652 (EWJ).
In mainland China, stocks soared after the government’s “official” non-manufacturing PMI for February climbed to a three-month high of 55.0. The Shanghai Composite Index surged 0.92 percent to 2,075 (FXI). Meanwhile, investors in Hong Kong were more realistic, being mindful of the fact that the government’s official manufacturing PMI for February dropped to an eight-month low of 50.2 from January’s 50.5. (A reading below 50 indicates contraction.) Worse yet, the HSBC China Manufacturing PMI for February (which includes smaller businesses) dropped to 48.5 from January’s 49.5. Hong Kong’s Hang Seng Index sank 1.47 percent to 22,500 (EWH).
In Europe, stocks sank as the situation in the Ukraine deteriorated. Companies which do business in Russia were particularly hard-hit. Shares for Société Générale, which has extensive exposure to Russian customers by way of loans as well as deposits, sank 5.43 percent.
Although the final Markit Eurozone Manufacturing PMI for February declined to 53.2 from January’s 54.0, the reading represented an improvement from the earlier “flash” estimate of 53.0. The Euro STOXX 50 Index took a 3.02 percent nosedive to 3,053 on Monday – dropping below its 50-day moving average of 3,086. Its Relative Strength Index is 41.94 (FEZ).
Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,822 despite finishing Monday’s trading session with a 0.74 percent drop to 1,845. Its Relative Strength Index (RSI) fell from 64.09 to 57.60. The MACD is retreating back toward the signal line, suggesting that the S&P could continue its decline during the immediate future.
On Monday, all sectors finished the session solidly in negative territory.
Consumer Discretionary (XLY): -0.94%
Technology: (XLK): -1.07%
Industrials (XLI): -0.67%
Materials: (XLB): -0.23%
Energy (XLE): -0.64%
Financials: (XLF): -0.78%
Utilities (XLU): -0.99%
Health Care: (XLV): -0.74%
Consumer Staples (XLP): -0.54%
Bottom line: Russia’s invasion of Crimea sent global stock markets lower, with the major American stock market indices making moderate declines.
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