On Thursday, Russian President Vladimir Putin warned Europe that its gas supplies could be disrupted if Russia cuts off Ukraine’s supply due to unpaid bills. Putin wrote a letter to eurozone leaders, stating his frustration with Kiev’s $2.2 billion dollar debt, saying that supplies would be cut off if the problem is not resolved quickly.
The letter drew US accusations that the Kremlin is using energy “as a tool of coercion”. Since Ukraine ousted President Viktor Yanukovich, Russia has almost doubled the cost of gas for Ukraine despite the nation’s economic crisis. An interruption to the gas flow in Ukraine would have a domino effect across Europe, as most European nations receive natural gas via a pipeline which passes through Ukraine.
In other news around the markets:
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On Thursday, the White House announced that Health and Human Services Secretary Kathleen Sebelius has decided to resign. Sebelius oversaw the rollout of Obama’s Affordable Care Act, which many have criticized for its many flaws. Many hope that her resignation will help calm the waters ahead of US midterm elections in November, in which Democrats are hoping to maintain control of the US Senate.
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The National Bureau of Statistics announced on Friday that China’s consumer price index increased 2.4 percent in March, with fresh food prices providing the bulk of the lift. However, producer prices fell 2.3 percent, the 25th consecutive month of decline.
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Greece made its way back into the good graces of financial markets as it sold more than $4 billion worth of bonds on Thursday. Though the sale raised less than one percent of the total needed to pay off Greek debt, it marked the nation’s return to stability after years of painful budget cuts.
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General Motors received more bad news on Thursday after estimates for the cost of the company’s recall were raised to $1.3 billion. The new estimate is more than three times what GM originally estimated and out paces the company’s first quarter profit in 2014. Additionaly, the ongoing investigation has forced the company to fire two engineers who were involved in the decision making related to the faulty ignition switches.
Asian markets were down across the board after being spooked by Wall Street’s losses on Thursday. The NIKKEI was down 2.38 percent, the Shanghai composite lost 0.18 percent, the Shenzhen composite fell 0.20 percent and the Hang Seng index lost 0.79 percent.
European Markets
European markets were down across the board; the UK’s FTSE lost 0.99 percent, the eurozone’s STOXX 600 was down 1.11 percent, the German DAX fell 1.21 percent, France’s CAC 40 lost 1.02 percent and the Spanish IBEX was down 0.86 percent.