A week of chaos in the financial markets, Market News

On the ninth day of the Russian invasion of Ukraine, tensions remain high, with Kiev and Moscow making no progress on ceasefire talks. It was an agreement just reached on Thursday to organize “humanitarian corridors” to evacuate civilians from combat zones. In the night, the disaster appears to have been averted. Human error or not, the Zaporizhia nuclear power plant, the largest in Europe, located in central Ukraine, was hit by attacks by the Russian army, which caused a fire. It was brought under control by the fire brigade. For the International Atomic Energy Agency (IAEA), this shows that the safety of nuclear facilities is ” extremely precarious At the request of the United Kingdom, the United Nations Security Council (UN) meets urgently this Friday at 5:30 pm. Right in his boots, Vladimir Putin reaffirmed his desire to conquer the country.

On the stock market, where the Chernobyl disaster of April 1986 is all too well remembered, such a situation can only lead to liquidations. Except Wednesday, where it rebounded 1.59%, the 40 remained stuck in red throughout the week. It was down another 4.97% on Friday, bringing the five-day drop to 10.23%. We need to go back to March 2020, and the start of the global Covid-19 pandemic, to see a grimmer picture. At 6,061.66 points, it is now at its lowest since March 2021. Since the beginning of the year, the barometer of the Paris market has not broken, but almost … It has lost 15.26%. The disaster is affecting all the stock markets of the world since London (-6.7% in five days) a New York (-2% for Dow Jones), Passing through Tokyo (-1.85%), except near Moscow, where the stock market has closed since Monday. It is expected to reopen on March 9, according to the operator of the Moscow Exchange (MOEX).

Panic

A sign of the panic that gripped the operators, the volumes were particularly high. Bank of America’s latest “The Flow Show” shows that outflows from European equity funds (in absolute terms) have never been higher: they hit $ 6.7 billion in a week, Wednesday to Wednesday. other. At the same time, the VIX implied volatility index, which measures the stress level of US traders, rose to 34 points.

When asked about the impact of the conflict on the economy, those who can answer are very intelligent. ” Past experience suggests that the economic impact of the Russian war against Ukraine will likely depend on the length of the conflict, the intensity of the fighting and the initial severity of the economic shock.recalls Jamie Thompson of Oxford Economics. Based on our examination of the consequences of over 300 historical conflicts, we have found that the impact on GDP is often concentrated at the outset, especially when conflicts are short-lived. Conversely, longer-lasting conflicts tend to have more persistent effects. In his scenario, the analyst foresees ” large economic losses in 2022 and even greater losses in GDP in 2023. “

The increase in the energy bill will be partly responsible for these losses. For the first time in Amsterdam, the price of gas exceeded 200 euros per megawatt hour (MWh). A barrel of Brent produced in the North Sea trades around $ 115 while the Texan benchmark WTI trades around $ 112.

Many falls

All European sector indices Stoxx 600 closed the session in the red, starting with the banking and automotive sectors. ” Nobody buys a new car when commodity prices skyrocket summarizes Michael Hewson, chief market analyst at CMC Markets. In a week, Renault it fell 24.29%, hampered by its exposure to Russia, which is its second largest market. For its part, the tire manufacturer Michelin (-7.16% Friday) decided stop production for a few days in some European factories due to supply difficulties due to the crisis in Ukraine.

The French bank most exposed to Russia, General Company it fell 26.88% during the week. The sector is also being dragged down by the flight to safe havens, which is causing bond yields to ease. That of the 10-year American Bond fell to 1.705% and that of the German Bund of the same maturity returned to negative territory at -0.08%.

The war in Ukraine and Western sanctions against Russia also hit the reinsurer Point (-16% in five days) and the export credit insurance specialist Coface (-20.92% over the course of the week).

At the end, Elior it flipped 23.02% over the course of the week, depressed by the announcement of the surprise resignation of its CEO Phillipe Guillemot. Citi also downgraded the collective catering group’s stock from “buy” to “neutral”.


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