In these times of uncertainty, there is only one certainty: volatility will continue to reign supreme in the financial markets. On the 3.55% rebound in Bedroom 40 Friday follows a fallback session on Monday, the eighth in nine days. The Parisian index ended down 1.39%, at 6,658.83 points, after a low of 6,516.16 points. The annual balance sheet is quite demoralizing: the barometer drops nearly 7%. As is often the case on stressful days, the volume of transactions was abundant, reaching 7.81 billion euros. The main global indices did not resist the downward pressure: in New York, the Dow Jones is drawn under 34,000 points. The lack of visibility and the fear that the situation will degenerate further are obviously hampering initiatives, even if Moscow has expressed its desire to find a ” OK with Kiev and even if Vladimir Putin says he is ready to consider stopping attacks against civilians and places of residence, preserving civilian infrastructure and securing the main roads, according to a press release from the Elysée. The Russian president demands in return the recognition of Crimea and the demilitarization of Ukraine. Started at midday, the talks between Russia and Ukraine have already ended, according to the Ria Novosti agency, which indicates that the officials have returned to their respective capitals for further consultations before a second round of negotiations.
In the meantime, Western economic sanctions seem to have achieved their objective: Russia is experiencing a ” bank run “, in other words a “banking panic”. The queues lengthen in front of the cash machines, taken by storm by a population worried about galloping inflation and the risk of impoverishment. The crisis is such that the European subsidiary of Sberbank, Russia’s leading state-owned bank, is in bankruptcy or probable bankruptcy “, because of “significant” withdrawals of deposits. The ruble is also in bad shape: the currency has fallen by almost 30% against the dollar. In order to stop the bleeding, the Russian central bank has decided to raise its main key rate from 9.5% to 20%, its highest level since 2003. It has also suspended quotations on stocks and options in Moscow . The country is now relegated to the rank of “junk” (speculative investment) by the financial rating agency Standard & Poor’s.
Rain of sanctions
Throughout the weekend, Westerners stepped up economic sanctions against Russia. The European Union, the United States, the United Kingdom and Canada have decided to freeze the reserves of the Russian central bank. Several – but not all – Russian banks have been excluded from the Swift interbank messaging system for international payments. ” We are blocking the Russian economy, the banks are collapsing, it is unheard of violenceunderlines Thibault Prébay, deputy general manager of Financière Arbevel. We are also creating a precedent, that in which the strategy of central banks, in addition to fighting against inflation, is to block a country “, he quips.
Given the weight of Russia in the world production of goods, the exacerbation of tensions translates into a continuation of the surge in the prices of raw materials, in a global movement, which goes from gold to coffee via the cereals. The barrel of Brent from the North Sea hit a new peak at 105.10 dollars while the price of wheat jumped more than 9% for fear of a halt in deliveries from Russia and Ukraine, which represent about 30% of world exports. Societe Generale and Credit Suisse have also decided to suspend their financing operations for commodity trading in Russia, according to the Bloomberg agency. For Thibault Prébay, there is no doubt: “the war will introduce a new energy order. We are moving towards a decline in fossil gas and a return to nuclear “, he says. A new theme, hitherto underlying, will also explode, according to the expert: that of sobriety, that is to say less energy dependence. ” If we run out of gas next winter, we may be heading for stricter sobriety rules, which is a blessing in disguise. […] The renewable-nuclear mix is the target towards which countries will move, and this more and more quickly. »
Defense actors sought
In such a context, values related to defense are sought after, especially since Germany has broken a taboo concerning its military doctrine inherited from the end of the Second World War. Chancellor Olaf Schulz has indeed announced that his country will henceforth devote at least 2% of its GDP to expenditure in the defense sector. In Paris, the title Thales soared 11.87%. Dassault Aviationthe father of the Rafale, climbed 7.87% and the manufacturer of hermetic cases Aegis won 21.95%. Conversely, Renault, shareholder of the Russian Avtovaz, parent company of the Lada brand, still won 6.56%. Production at the French group’s Moscow factory is on hold until Friday due to supply problems, a spokesman for the group said. For their part, the banks saw red, in the forefront of which Societe Generale (-9.89%), French institution with the most exposure to Russia.
Will the crisis push OPEC+ to raise its production quotas? And the major central banks are moderating their ambitions in terms of monetary tightening? Oil-producing nations and their allies, including Russia, are meeting on Wednesday to re-examine market fundamentals. As things stand, it seems unlikely that they will renege on their production quota agreement. On Sunday, Saudi Arabia reiterated its commitment to the OPEC+ agreement with Russia during a meeting between Crown Prince Mohammed bin Salman and French President Emmanuel Macron, the official Saudi Press Agency reported. For their part, the mission of central banks is made more complicated by geopolitical tensions. ” The strategy of the European Central Bank could be affected more directly if the crisis escalates and we could see it delay its plans to withdraw monetary accommodation later this year.said William Davies, Global Chief Investment Officer at Columbia Threadneedle Investments. In the US, the Fed is unlikely to change course on monetary policy tightening and we continue to expect an initial 25 basis point rate hike in March.. This is less than the 50 basis points which were still anticipated by the market a few days ago.
PC