Today was another surprise Monday. Short sellers who thought a rough weekend in Ukraine might stir up the war drums again were wrong. In addition, China took several steps to boost its economy, and the domestic economic reports were fairly positive. As a result, the shorts capitulated at the opening and risk was on. The day ended led by the DJI (every stock was positive!), up more than 1%, with the S&P 500 up nearly 1% and the NASDAQ up about 0.8%. All sectors rose, led by the normal risk-on leaders, Technology and Industrials, both up +1.3%. Financials were up 1.0%, and Healthcare was up 0.9%. While Utilities were favored last week, it trailed all sectors, up 0.6%.Â
It isn’t that there was a lot of positive news from the Crimean secession referendum, but rather that it passed by a resounding 95% without military action or rioting. The U.S. and Western Europe grumbled about legality and possible sanctions, although only relatively minor ones were thrown on the table today.
The crisis is hardly over. Putin could escalate against Ukraine but hasn’t yet. Sanctions could get worse, but they haven’t yet. There are many issues of infrastructure support for Crimea. But it is possible that the parties to the crisis could agree that maybe everyone could get what they want without too many dramatics to restore the severe crisis atmosphere. Probably not very likely, but at least for today, the shorts have miscalculated.
China’s new urbanization plan stabilized Chinese economic worries as did daily trading Yuan’s rise from 1% to 2%, which should assist Chinese exporters. China’s market liked what it saw, at least today, with the Shanghai market up almost 1%. European markets all rose more than 1% except the FTSE 100 which rose 0.61%.
Meanwhile here at home, Industrial Production surprised coming in at +0.6%, much better than expectation of 0.1% and last month’s dreadful -0.3%. The NY Empire Manufacturing Index also rose to 5.6, better than the expected 5.4 and better than last month’s 4.48.
