Traders will wake up to a yet another trading session

Good Morning all!

Traders will wake up to a yet another trading session that will be dominated by growing geopolitical tensions away from finance as the fallout from the crash of Malaysian Airways flight MH17, and the on-going violence in Gaza is likely to keep investors focussed. The UN has called for an immediate ceasefire in Gaza after the weekend saw the deadliest day of fighting between Israel and Palestinian militants. Discussion with the UN is on-going after Sunday saw 13 Israeli soldiers and over 100 Palestinians killed. US secretary of state John Kerry arrives in Cairo in the next few hours to discuss the crisis with Egyptian leaders.

The pressure on Vladimir Putin is growing by the day, as flight investigators disgracefully remain without full access to the crash site in eastern Ukraine. Mr Putin has been under pressure from Europe and the US to do more to stop the fighting between pro-Russian activists and the Ukrainian military long before the downing of a Malaysian airways flight last week. It now seems that we are moving towards a situation where sanctions from European countries on Russia are almost a certainty. The issue surrounding these potential sanctions is that none of the sides involved in this tension with Moscow can afford the repercussions. Contrary to popular belief Russia are in a very unstable financial position and any hard hitting sanctions that are supported by Germany could have the effect of dragging Russia into recession. Vladimir Putin has in the past threatened that any sanctions from Europe will be met with retaliatory sanctions imposed by themselves. If this were to happen then the already faltering German economy could face a huge problem. It had seemed over the last few months that the US were the only country willing to impose hard hitting sanctions on Russia, but with international outrage growing at Vladimir Putins refusal to act it could well be that sanctions are now almost a certainty as Europe looks to get tough with the Russians.

Elsewhere it seems that European markets will have a fairly quiet start to the week on the economic calendar as German PPI is the only major announcement due out. However as the week moves on we do start to heat up with data out of the US and Eurozone looking to take centre stage. Tuesday’s session sees US CPI released and with Janet Yellen’s hawkish comments last week it could be that investors are looking for any kind of reading that hints at a change in monetary policy. Janet Yellen, said at last weeks questioning that any substantial change in economic readings could well force a rethink on monetary policy and a move to push up interest rates if it was needed.

Thursday sees the busiest day of the week as far as data is concerned with Europe the UK and the US all in focus. However it may well be that more pressing and worrying news out of Gaza and Russia will take centre stage long before then. The one thing financial markets cannot deal with is uncertainty, and with such huge decisions to be made on potentially devastating ge political situations everyone will be hoping for positive outcomes when officials make their decisions. However it very much feels like the situations in both Gaza and Russia are likely to get better before they get worse, and therefore they are likely to dominate the landscape for traders for the foreseeable future.

Ahead of the open we expect to see the FTSE 100 higher by 10 points with the German Dax higher by 8 points.