2014.08.0809:42:11UTC+00European shares drop on geopolitical risks on Iraq, Ukraine

European shares extends its descent as geopolitical tensions in Ukraine and Iraq escalate with the latest development had airstrikes set to occur as per command of US President Barack Obama.

The pan-European Euro Stoxx 600 index is significantly lower with the benchmark index stooping as the heightening tensions in Ukraine and Iraq continue. The Stoxx 600 shed 0.6%. UK’s FTSE 100 is down 0.034% or 22.31 pips to 6,575.01. Germany’s DAX Index declined by 0.11% or 9.56 to 9029.41 while France’s CAC 40 Index gained by 0.5% or 2.02 points to 4151.85. Spain’s IBEX 35 Idx advanced by 0.78% or 79.00 points to 10,157.40.

US futures, meanwhile, increased with Standard & poor’s 500 Index gaining 0.2% recovering from its previous loss. The gain of these futures is an indication that the gauge will reduce its week’s loss. 10-year yields of Germany shed 4 basis points to 1.02%. The franc strengthened versus all the 31 major peers. The ruble weakened  for the seventh straight day. Brent crude added 0.9% while gold, 0.5%.

Chief investment officer at Reyl & Cie, Francois Savary, told Bloomberg that the announcement of US President Barack Obama just adds to the geopolitical tension already happening in Russia and Ukraine. Savary speculates that the biggest puzzle would be if these events will arouse a “slowdown in global economic activity, or even a recession, to the extent that you have to reassess the recovery.”

US President Barack Obama has given the go signal for a US airstrike on Iraq with the purpose of avoiding genocide while no ground troops will be sent in. The announcement has definitely escalated tensions further with Russia as it retaliated versus the US and European sanctions with the ban on import foods from the western countries. Russian President Vladimir Putin is in the position to raise the turmoil right now if Russia decides to invade Ukraine.