Last week, the Russian-Ukrainian conflict remained the center of attention for participants in financial markets across the world. The leading western countries did not recognize the outcomes of the referendum held on the territory of the Crimean peninsula on 16 March and condemned the annexation of the peninsula by the Russian Federation.

Nevertheless, investors’ anxiety began to subside over the previous week. Investors were satisfied with a statement of Russia’s President Vladimir Putin that Russia “does not want Ukraine to divide.” Governments of the leading western countries resorted to immediate sanctions against Russia.

However, at the moment, sanctions are not the strictest. In particular, the EU is still waiting with the imposition of “third degree” economic sanctions, leaving them as an extreme measure should Russia resort to further aggression against Ukraine.

A meeting of the US Federal Reserve System (FRS) was an important event of the previous week. As a result of this meeting held on 18-19 March, the FRS tapered the quantitative easing program (QE) by USD 10 billion for the third time in a row. It was also pointed out that the base interest rate may stay below the line for a long period of time, even after targeted macroeconomic indicators have been achieved. Therefore, it is not worth waiting for a sharp reduction of incentives for the US economy in the near future.

During the current week, investors will continue following the development of the Russian-Ukrainian conflict and also will be evaluating the attitude of western politicians to this conflict.

Financial markets survey 24.03.2014