US markets look set to open higher on Monday after the citizens of Crimea overwhelming voted to annex themselves from Ukraine and join Russia over the weekend. The move higher follows in the footsteps of reversals in European markets with even the Russia’s benchmark Micex index snapping its 4-day decline to see some gains. Futures suggest the S&P500 will open 10 points higher at 1,851 with the Dow Jones expected to open 89 points higher at 16,154. Last week we wrote, “With most expecting the Crimean vote to be a ‘yes’, that result should largely be priced into markets… More likely, market gyrations will be in the hours and days following the vote, as the exact sanctions, if any, are announced by the EU and US.” The aggressiveness of Vladimir Putin’s response to the vote will likely dictate the extent of sanctions. The S&P500 and Dow Jones have both dropped just over 3% from their highs on March 7th. This is quite benign when compared with a decline of around 8% for the German Dax which made its highs on Feb 21. Any sign that Sanctions are on the weaker end of the spectrum could set US markets up for the FOMC meeting on Wednesday and a possible re-test of all-time highs. On the data front for today’s session, the latest Empire manufacturing survey for March is expected to show an improvement from February’s disappointing 4.48, with a rise to 6.25, while February industrial production is expected rise 0.2%, up from the decline seen in January of 0.3%. Chinese solar company JA Solar Holdings Co. (JASO) saw a massive 8% ramp higher on Friday as analysts at Axiom Capital revised their price target higher tenfold. The Chinese solar sector was in the hot seat last week after the default on a bond payment by Chaori Solar was part-catalyst for the risk-off sentiment seen in global markets. JA Solar’s earnings release now becomes an interesting one to watch to see if this revision was justified. With the prospect of weaker demand for materials out of China, the basic materials sector was the second-worst performing in the US last week. Any move higher in the overall market could see this sector re-emerge at the top of the rankings. In what could potentially be the biggest IPO in history, Alibaba, the Chinese internet search/shopping giant is set up for an NYSE IPO later this year after disagreements with exchange regulators in Hong Kong. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
US Markets higher as investors sell the rumour buy the fact on Crimea
20:00, 16 March 2014