Daily Market Update

Daily Market Update

Daily Market Update Ukraine crisis sends European markets down
With the tragedy of Malaysia Airlines flight MH17 still causing tension in diplomatic circles and fresh reports of increased military action in Ukraine, the markets in Europe were universally down this morning. Although there appeared to be a greater chance of a calming of the unrest in the country as western powers ramped up pressure on Russia, news of a new push by Ukrainian troops has the potential to escalate the situation. Asian markets were generally up after positive US earnings reports last week and more expected this week. Japan’s market was closed today due to a public holiday. US stocks are expected to be less affected by the Ukrainian crisis and likely to be buoyant due to the optimistic earnings season.

Investors concerned over junk bonds
Investors are pulling their funds out of junk bonds after the Fed raised concerns about the market. Janet Yellen said last week that the Fed is keeping a close watch on high-yield bonds but is not predicting an imminent threat to financial stability. Some analysts are suggesting it could be the time to cut back exposure to the potential crash of the risky investments and last week saw the biggest outflow in nearly a year. However a wholesale exit could see prices plummet faster than would naturally have been the case. Investment in investment-grade corporate debt has seen an increase. Read the full story.   

Russians sell steel plants in US
Two Russian-owned steel plants in the US are to be sold to domestic corporations. Steel Dynamics will acquire a plant in north east Mississippi and AK Steel will be the new owner of a plant in Michigan. Both are being sold by Severstal which invested heavily in the US before the economic crisis but is struggling with loses. It says it has been seeking buyers since last year; it is not related to the increased US sanctions on Russian businesses. For the two US purchasers the plants represent something of a bargain; high-tech modern facilities being sold by a firm that needs to offload them quickly. Read the full story.

McDonalds and KFC in new food scare in China
Having been fighting hard to recover from a scandal in 2012 - when meat being used in their Chinese products was found to contain high antibiotic levels - McDonalds and KFC owner Yum Brands could have done without another problem. The latest issue is a TV report showing a meat supplier’s workers mixing fresh and past-expiry-date meat together and picking up meat that had been dropped on the floor. Both fast food companies have stopped using the supplier which has been shut down by regulators anyhow. China’s fast food sector is worth $174 billion and McDonald’s and Yum are the biggest players, so the stakes are high. The supplier has a previously good reputation and is used by many reputable companies. Read the full story.

Swiss bank optimistic about investigation outcome
As the US authorities continue to tackle banks and other financial institutions  that have stepped out of line, Swiss private bank Julia Baer believe there will be a ‘fair and equitable’ solution to the probe into their involvement in helping wealthy Americans avoid taxes. Pointing to the settlement of the Credit Suisse investigation, Julias Baer CEO Boris Collardi has said that he is confident that a solution will be found within months. Read the full story.