US Secretary of State John Kerry hinted that Russia’s storming of the Crimean peninsula was so 19th century; Might it be the case that investors’ willingness to embrace new technology ranging from social media to electric cars is too 22nd century? Back-peddling on behalf of President Putin over the situation on the ground in the Ukraine has ushered in a wave of relief amongst investors. Volatility has dipped, yet remains elevated at 14.26 (-10.8%) while the S&P 500 index has jumped 1.3% or 25-points to 1871. That’s a sentence we hardly thought we’d write this week as a Russian military advance appeared to be building. Investors have clearly got an appetite for equities displaying strong momentum no matter whether geopolitical risks or fears for the health of the recovery stand in their path.
Industrial and financial companies are leading the pack with all sectors higher. The vigorous rebound for stocks is all the more intriguing given that Monday’s selling pressure really had little time to build, indicating that the rebound is hardly an overshoot. Maybe we really should be somewhere between the reaction to and the reality of the rising stock market.
Chart – S&P 500 Index defies geopolitical risk and surges to record peak
(click to enlarge)