Crimea vote, growth concerns in China could aff ect trading
TORONTO — The Toronto stock market could face further selling pressure this week as traders weigh the outcome of a controversial weekend referendum in Ukraine’s Crimea territory and growth prospects in China.
The U. S. Federal Reserve will also be in focus mid- week as the central bank holds its latest interest- rate meeting.
The Ukraine issue was the biggest concern at the end of last week, ahead of Sunday’s referendum in which residents were voting on whether to break away from Ukraine and join Russia.
On Sunday, Crimeans voted to leave Ukraine and join Russia, overwhelmingly approving a referendum . Analysts have said there wasn’t a lot of doubt about the outcome of the vote as Crimea has a high proportion of Russian- speaking people. But there was uncertainty about how western countries will respond.
“What we’re worried about to some extent would be the risk of some more serious deterioration in Russia- G7 relationships and eventually the possibility of more serious economic sanctions,” said Jean- Francois Dion, portfolio adviser at RBC Wealth Management.
G7 countries, which include Canada and the U. S. have called the vote illegitimate and say they won’t recognize the results.
They have also warned there will be costs if Moscow moves to annex Crimea, where Russia has major naval installations.
Questions about Chinese growth and the health of its financial system will also weigh on markets in the wake of soft export, retail and industrial production numbers released last week that raised doubts on whether the country can reach its stated goal of 7.5 per cent growth this year. The country’s first corporate bond default March 7 also created tensions over worries about the health of other companies. Those concerns had the effect of pushing copper prices down about 10 per cent last week to mid- 2010 levels. The TSX base metals component tumbled a similar amount.
Meanwhile, the U. S. Federal Reserve makes its interest rate announcement Wednesday afternoon, followed by a news conference with newly minted Fed chair Janet Yellen.