by Claude Chendjou
PARIS (Reuters) – European stock markets ended in scattered order on Tuesday after a volatile session while Wall Street evolved in the red at midday, investors seeming divided on the Ukrainian crisis and the scope of the Western sanctions against Moscow.
In Paris, the CAC 40 ended down 0.01% at 6,787.6 points. The British Footsie, on the other hand, took 0.13%. The German Dax lost 0.26%.
The EuroStoxx 50 index fell 0.01%. The FTSEurofirst 300 advanced 0.07% and the Stoxx 600 0.07%.
Germany and Britain announced on Tuesday a first salvo of sanctions against Russia after the recognition the day before by Russian President Vladimir Putin of the independence of two separatist regions in eastern Ukraine.
While the markets initially shook sharply in the face of the Ukrainian crisis, some analysts note that investors are now clinging to the slightest sign that could avert a real war.
“The recent move by Russia is now priced into the markets. But if (Russian) troops cross the border and a conflict ensues, then I think the markets will react much more negatively,” he said. Craig Erlam, analyst at Oanda.
The Interfax news agency further reported that Russia recognized Donetsk’s independence only within “its administrative boundaries”, with Moscow not wishing to sever relations with Ukraine.
“It’s not clear, but it sets the stage for de-escalation,” Trium Capital fund manager Peter Kisler said, referring to reports of Ukraine’s border recognition.
Vladimir Putin also said that the possible actions of the Russian army in the Ukrainian Donbass will depend on the situation on the ground, while US President Joe Biden is due to speak at 6:00 p.m. GMT on Ukraine.
VALUES IN EUROPE
While almost all of the major sectors of the Stoxx 600 were in the red at the start of the session, only four ended lower. The most marked decline being that of non-cyclical consumption (-0.4%), while on the other side of the spectrum, new technologies recorded a rebound after four sessions of decline (+0.7%).
In the automobile compartment, up 1%, Porsche SE and Volkswagen gained 11.3% and 7.8% respectively after the announcement of discussions on a possible IPO of the Porsche brand.
Renault, on the other hand, lost 3.7%, penalized by its exposure to Russia, where it controls the local brand Avtovaz, which said on Tuesday it was looking for alternatives to secure its chip supplies in the event of American sanctions.
In financial account publications, Worldline gained 10.5% after quarterly revenue beat expectations, while Edenred advanced 4.6% on the back of “historic” results in 2021.
AT WALL STREET
At the close in Europe, the Dow Jones fell 0.95%, the Standard & Poor’s 500 0.75% and the Nasdaq 1.23%.
Seven of the eleven main sectors of the S&P-500 evolve in the red, the compartment of the consumption of non-essential goods (-3%) showing the largest decline.
The tourism, transport and travel sector is also suffering, while the threat of American sanctions against Moscow affects semiconductor manufacturers Nvidia (-2%), Intel (-1%) or Qualcomm (-1%) because their exports to Russia could be blocked.
In quarterly publications, Home Depot (-8%) and the department store chain Macy’s (0.6%) fell after their results.
THE INDICATORS OF THE DAY
The monthly survey by the Ifo economics institute showed that the business climate in Germany improved further in February, with the index rising to 98.9 from 96.0 in January, despite tensions linked to Ukraine, with companies counting on the end of the coronavirus crisis.
CHANGES
At foreign exchange, the dollar fell by 0.15% against a basket of reference currencies, the geopolitical context benefiting above all the yen and the Swiss franc.
The euro rose 0.3% against the greenback to 1.1345 dollars after hitting a low in session since February 14.
RATE
Yields on US Treasuries, which fell at the start of the day with the general decline in safe havens, are on the rise, at 1.9477% for ten-year securities and 1.5387% for those at two years, at the close of trading in Europe.
The ten-year German Bund rate ended up four basis points at 0.2410%, while its French equivalent of the same maturity took two points at 0.7340%, the anticipation of a European Central Bank (ECB) rate hike by July taking precedence over geopolitical tensions.
OIL
The price of oil has risen to its highest level since 2014, with escalating tensions around Ukraine amplifying the risks of tighter supply.
Bank of America (BofA) estimated on Tuesday that the price of oil could increase by 5 to 20 dollars if the Ukrainian crisis worsens.
Brent gained 1.36% to 96.68 dollars a barrel after a peak at 99.50, very close to the symbolic bar of 100 dollars, below which it has been evolving since September 2014. American light crude oil (West Texas Intermediate, WTI ) takes 1.84% to $92.75.
TO BE FOLLOWED ON WEDNESDAY:
The final inflation figures for the eurozone for the month of January
(Some data may show a slight shift)
(Report Claude Chendjou, edited by Jean Michel Bélot)
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