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Traders are once again going to keep the geopolitical situation as the centre of their attention this week. Given that we have seen a new round of sanctions on Russia by Europe, it was widely expected that US will join EU by announcing the similar sanctions, if not going one step further. But, the US did actually go one step further by putting sanctions not only state owned energy companies but also targeted completely private company which had nothing to do with Ukraine. It just shows the intensity of this Cold War of sanctions against Russia.
The question is if these sanctions are actually working in terms of hurting the country’s growth? Well, it is without any doubts giving hard time to Russian economy. However, if traders are thinking that this is going to stop here and if this is the end of this? No, certainly not, what we need to be prepared for is the counter action by Russia which they are preparing for it. The rumours are all over the place that perhaps Russia will stop planes flying from its air space and if such measures are announced then perhaps you may see the demand of crude oil picking up and profit for airlines dropping. We also have some news about putting a ban on the car import, brands like Mercedes, BMW, Peugeot, Land Rover are all very famous in Russia, and any kind of quota or ban on these cars could hurt the profit of these companies so you may want to short these stocks and buy once we see them attractive again.
Back in the UK, Scottish referendum is going to keep dominating the head lines this week and any further poll which shows that Yes vote is in the lead may cause sell off in the equity market and got GBP. However, opposite is also true if we see the NO vote in the lead. The referendum polls are always full with margin errors so one cannot completely rely on them as the actual outcome could be very different as compare to the original result.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.
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