Financial markets vulnerable to war in Ukraine

Markets showed their vulnerability on Monday in the face of the war in Ukraine, still unable to anticipate the evolution and economic impact of the conflict that is causing soaring commodity prices and high volatility.

After a drop of more than 4% at the start of the day, some European indices made a small foray into green before finally retiring to finish in the red: Frankfurt lost 1.98%, Paris 1.31%, Milan 1.36% and London 0.40%.

In New York, Wall Street closed sharply, worried about the impact on the economy and inflation of the war in Ukraine and sanctions: the Dow Jones index lost 2.37%, the Nasdaq fell by the 3.62% and the S&P 500 lost 2.95%.

Stunned at the beginning by discussions on the possibility of banning imports of Russian oil in response to the invasion of Ukraine, the European indices relaxed slightly after the announcement of a meeting between the heads of Russian and Ukrainian diplomacy scheduled for Thursday in Turkey and before the third Monday evening in Belarus begins the Russian-Ukrainian negotiation session, dedicated to humanitarian corridors.

This ended Monday at the end of the day with some “positive results”, Mykhaïlo Podoliak, a member of the Ukrainian delegation, announced on Twitter.

Investors also took note of German Chancellor Olaf Scholz’s statement that imports of fossil fuels from Russia are “essential” for the “everyday life of citizens” in Europe and that the continent’s supply cannot otherwise be ensured in this. phase.

On the US market, fears of an embargo on Russian crude imports that would further raise oil prices accelerated losses at the end of the session.

US President Joe Biden “has not made a decision at this stage” on such an embargo, however, the White House said.

Raw materials on the rise

Under these conditions, oil prices continued to rise on Monday.

The North Sea Brent barrel, which at the beginning of the Asian session had touched 140 dollars, then fell back but still closed at 4.31%, at 123.21 dollars.

As for the barrel of West Texas Intermediate (WTI), delivered in April, it rose by 3.21%, closing at $ 119.40, after exceeding $ 130 at the beginning of the session.

The price of the reference European gas contract rose by 11.66%, after reaching a new record of 345 euros per megawatt hour.

The prices of metals continued to rise: that of aluminum broke the $ 4,000 per ton mark for the first time. That of nickel has reached, like copper and palladium, an all-time high of 55,000 dollars per ton.

Wheat grinding reached € 435 per tonne on the European market.

Against this backdrop, investors fear that inflation, already worrying, will rise further due to soaring energy and commodity prices, and that companies will suffer from these price hikes that raise their operating costs.

According to several market observers, this crisis should not call into question the normalization of monetary policy by the European Central Bank, which meets on Thursday, but it could still postpone it.

Financial markets vulnerable to war in Ukraine

After breaking above $ 2,000 an ounce on the first since August 2020, gold was trading at $ 1,996.81 an ounce just before 22:00 GMT.

The dollar gained 0.67% against the euro. Previously, the European currency fell temporarily by 1% against the greenback.

The Russian currency melted 16% to 139.29 rubles per dollar, after hitting 177.26 rubles per dollar, a new all-time low.

Many sectors in decline

“All companies with exposure in Russia – even a simple case of economic contact – are sold as if they have suddenly contracted plague and cholera …”, summarizes Fidelity International in a statement.

Financial markets vulnerable to war in Ukraine

Bank insurance was again neglected, such as Allianz (-2.83% to 183.22 euros), Commerzbank (-5.19% to 5.64 euros, to MDax), Deutsche Bank (-2.77% to 8 , 90 euros), Munich Re (-4.45% to 209.15 euros) in Frankfurt or Société Générale and BNP Paribas which lost more than 4%.

In tourism, Air France-KLM fell 6.07% to € 3.30 and the Accor hotel group lost 7.12% to € 24.25. In London, Easyjet plunged 7.53% to 439.50p and IAG plummeted (5.86% to 116.24p). In Dublin, Ryanair fell by 7.79% to € 12.25.

In New York, the prospect of a jump in the cost of kerosene caused Delta Airlines (-12.78% to $ 30.11) and United Airlines (-15% to $ 31.20) to fall sharply.

In Frankfurt, Adidas lagged behind (-5.40% to 176.90 euros). The group achieves less than 3% of its sales in Russia but has not yet communicated on whether or not to continue its activities in the country. His rival Puma, which announced on Saturday to suspend them, fell 3.99% to € 64.98.

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