Global Conflict Affects Markets

Global Conflict Affects Markets

US stock futures declined as investors digested the possibility of a Greek exit from the euro zone.

Global Conflict Affects Markets
Global Conflict Affects Markets

Meanwhile, Russian officials warned the US against providing arms to Ukraine which could only worsen the conflict there.

Greece’s Prime Minister Alexis Tsipras renewed fears of a Grexit (a Greek exit form the EU) after underscoring his initial promise against the nation’s bailout, according to Bloomberg. Tsipras pledged to work toward an end to austerity, which might lead to confrontation with international creditors.

As a result, futures indices showed the US market could open lower Monday after last week’s strong performance. The S&P 500 added 3% last week – its strongest increase in almost two months. Futures contracts on the S&P 500 dropped 0.5% on Monday. Futures for the Dow lost 0.5% as well.

“We had the earnings season and that is done and dusted, and now it’s Europe that may step in with noise about the negotiations about Greece and about Ukraine,” Christian Gattiker, head of research at Julius Baer Group Ltd. in Zurich, told Bloomberg. “All the Greece debate and the uncertainty about the euro zone is certainly not good news for global sentiment.”

West considers Ukraine options
American and European leaders are working to provide a united front in alliance with Ukraine against Russian incursion, according to The Wall Street Journal. However, the US and Germany differ on exactly how to offer that support.

Russian President Vladimir Putin is expected to provide a course of action on Wednesday that would outline how and when to end fighting in Ukraine, initiated by German Chancellor Angela Merkel. If Putin does not comply, Germany will increase sanctions against Russian companies.

On the other hand, the US is weighing the possibility of providing Ukraine with more arms. President Barack Obama has not come to a decision. While Germany opposes such a move, other European countries like Lithuania believe it is the right move. Russia still denies any involvement in the conflict by way of ground support, but US and EU officials point to evidence to the contrary.

In either case, the market – particularly those in Europe – will likely be influenced. Investors would be wise to keep an eye on Greece and Ukraine as they make decision moving forward.

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