The indices are sinking into the red as the situation becomes quite tense between Ukraine and Russia, dampening hopes of a Putin-Biden summit.
The respite was brief. After taking a small step forward in the morning, the markets are looking gray again. The Paris Bourse fell 2.04% to 6,788.34 points, depressed by the crisis in Ukraine. Elsewhere in Europe, Frankfurt and Milan lost just over 2%. As for the Eurostoxx 50, the benchmark European index, it fell by 2.17%.
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Nickel at its highest since 2011
Russian stock market indices for their part fell by more than 10%. The main index of the Moscow Stock Exchange, the RTS (denominated in dollars), ended the day with a plunge of more than 13% at the close, and more than 24% since the beginning of the year. The IMoex, denominated in rubles, fell by more than 10% at the same time.
The Russian currency was also unscrewing. The ruble briefly passed the 90 rubles per euro mark (90.3) before stabilizing around 89.5 rubles/euro. Against the dollar, the ruble peaked at 79.7 per dollar before falling back to 79.1 rubles/dollar.
The foreign exchange market thus came close to the symbolic bars passed at the end of January, ie 80 rubles for one dollar and 90 rubles for one euro. The Central Bank of Russia was then forced to suspend the purchase of foreign currencies in an attempt to support its currency. Another sign of investor concern, the ton of nickel reached nearly 25,000 dollars on Monday, a peak not seen for more than 12 years.
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Tension has suddenly risen between Russia and Ukraine. On Monday morning, Moscow accused Ukrainian forces of bombing a Russian border crossing, destroying a structure without causing any casualties, which the Ukrainian authorities denied, citing an act of Russian disinformation. Moscow then claimed to have killed five “saboteurscame from Ukraine into Russian territory, which Kiev has again denied. In the evening, Vladimir Putin announced that he recognized the independence of the pro-Russian separatist regions of eastern Ukraine. A decision condemned by the United States like the United Kingdom and France as well as the UN.
Markets fear that an incident, real or staged, could be used as a pretext for a Russian offensive against Ukraine. Fighting between the Ukrainian army and pro-Russian separatists backed by Moscow has been heating up for three days in eastern Ukraine, a region bordering Russia.
Europe’s recovery in jeopardy
For specialists, military action in Ukraine would immediately provoke economic sanctions against Russia, followed by reprisals from Moscow on the supply of gas, vital for many European industries. For the Axa specialists, “further escalation could easily increase the overall cost of energy in the Eurozone by more than 10%, which could be enough to reduce household purchasing power by more than 1%“. According to him, such an outcomewould have the potential to seriously undermine the European recovery“.
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Industrial flagships under attack
In Paris, almost all the values of the CAC 40 without distinction were in the red in the middle of the session. Téléperformance fell by almost 5%, L’Oréal by 3.5% and Alstom by 3.3%. The industrial flagships were all caught up in the image of Schneider (-3.08%), Legrand (-2.9%) or Air Liquide (-2.7%). Among the big stocks, only Eurofins Scientific (+1.03%) narrowly managed to escape the purge.
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