The Ukraine announced a permanent 'ceasefire' with Russia on Wednesday morning, causing a positive reaction on the Russian stock market that in turn sent the FTSE 100 to 6,898.62, its highest level for more than 14 years.
After months of tension across global markets, driven in part by the impact of the West's sanctions on Russian stocks, Moscow’s Micex index climbed 2.7% in response to the news, while the RTS Index jumped 4.2%. This had a knock-on effect on the markets across Europe. At its session high, the FTSE 100 was at 6,898.62 – its best performance since the final trading session of 1999.
The top FTSE 100 riser was International Airlines Group, parent company of British Airways, up 2.9%. And there were big gains for the likes of EasyJet, engineer Weir Group, and Ashtead, the industrial equipment hire business. When you couple this with the PMI data also released today, that said UK manufacturing, services and construction were all growing nicely, it all sounds properly rosy. Who doesn't like a buoyant market?
But it soon turned out the Russia-Ukraine accord may just be too good to be true. The vaunted ceasefire seemed suddenly doomed before it had even started when the Ukraine's President Petro Poroshenko backtracked from the word 'permanent' that he himself had attached to the ceasefire (at least on his Twitter feed – modern politics, eh?). Meanwhile Putin pointed out they'd actually been discussing a 'ceasefire regime' that he hoped might be in place by the end of the week. Presumably they'd been DM'ing that bit.
Obviously the ramifications of such a back-and-forth are innumerable and highly complex. But the turnaround provides the perfect illustration of the perils of micro-analysing global events. At its session high, the FTSE 100 stood just 52 points shy of its all time high of 6,950.6. The latter was at the peak of the dotcom boom. Or put more soberingly, on the eve of the dotcom bubble. Let's hope Putin and Poroshenko are able to put their pins away.