Global equity markets executed a sharp turn about yesterday following Putin’s comments that suggested no further aggravation in Ukraine in the short term. The Russian President emerged from the hot seat, stressing that he would not go to war with the Ukrainian people although military force may be applied in an extreme case. While some may be of the view that Putin is backing down due to western political pressures, the not-too-distant memories of the Russo-Georgian war may provide a more pertinent lesson. The short war saw some $300bn outflows six months after the event. The latest foray into Ukraine is all too familiar, with the Micex falling to a multi-year low and outflows of $60bn, suggesting some internal pressures to alleviate the escalating tensions. That said, conditions on the ground remain tense. As long as both sides of the troops remain entrenched in Crimea, all it takes is for a trigger to see conditions worsen. Hence the rebound in markets yesterday may have been over zealous given that conditions haven’t really changed, aside from the usual cajoling of politicians. After witnessing the steepest daily fall since February, the S&P 500 rebounded to mark its largest gains this year of 1.5%, creating yet another record. Such is the disarray of markets that investors saw the latest dip as an opportunity to enter on anticipation that economic data will improve as winter thaws. After the ISM manufacturing report on Monday suggested the effects of the adverse weather are diminishing, investors now have their eyes on the ADP non-farm payrolls data to print on the upside. The ISM Services PMI will be closely watched as well, as after shrugging off the cold last month to beat forecasts, analysts are projecting a slight slowdown from 54 to 53.8. In the currency space, the AUD dollar rebounded this morning following reports that Q4 GDP came in better than expected at 0.8%. Meanwhile attention will shift to the People’s congress although the main meat of the report was released this morning with an aim to retain its 7.5% GDP growth target this year.