The Paris Stock Exchange starts the week down, while monitoring the ongoing discussions between Ukraine and Russia. Kiev called on Moscow to a ” immediate ceasefire as part of a meeting between delegations from the two countries on the border between Ukraine and Belarus. But this appeal is unlikely to be heard as Moscow intensifies its attacks on the capital Kiev, which continues to resist.
Investors are shedding risky assets in favor of “safe haven” stocks after the tightening of Western sanctions against Russia. The European Union, the United States and Canada have excluded several Russian banks from the Swift interbank messaging system for international payments. France also plans to target the assets of Russian oligarchs on its territory. Vladimir Putin put his nuclear deterrent on high alert on Sunday.
Around 2:30 p.m., the Bedroom 40 fell 3.03% to 6,548.54 points in a business volume of 3 billion euros, thus returning to the correction zone after a fall of 11.3% compared to its record of January 5. The contracts future March on American indices yielded around 1.3%.
The foreign currency assets of the Russian central bank are also targeted, in particular by sanctions from the Biden administration, which would also target the sovereign wealth fund and the Russian Ministry of Defense, reports CNBC. The Russian central bank has also raised its main key rate to 20%, the highest since 2003, against 9.5% previously to support the ruble, which fell 30% against the dollar. She also announced that there would be no stock and options listings on the Moscow Stock Exchange on Monday. For its part, the Standard & Poor’s agency downgraded Russia’s credit rating to the rank of “junk” (speculative investment).
Banks fall, defense sector takes center stage
On the oil front, a barrel of Brent from the North Sea rose back above the $100 threshold after peaking at 105.07 two days before an OPEC+ meeting, but traders doubt that the enlarged cartel will opt for an increase in its production quotas. The contracts future on natural gas gas jumped 10.5% to 102.94 euros per megawatt-hour in Amsterdam. As a result, groups specializing in renewable energies are on the rise. Voltalia and Neoen advance by 9% and 8% respectively.
The other raw materials are also blazing in a global movement ranging from metals, including gold, to coffee and cereals. The price of wheat jumped more than 9% on fears of a halt in deliveries from Russia and Ukraine, which account for around 30% of world exports. Societe Generale give up 11% and Swiss credit 2%. Both institutions will suspend their commodity trade finance operations in Russia, according to Bloomberg. Heavily exposed to Russia, Ukraine and Belarus, the Austrian bank Raiffeisen bank plunged 13.9%. In addition, BP announced that it was going to sell its 20% stake in the Russian oil group Rosneft. In London, BP loose 7.2%, while in Paris, TotalEnergies down 5.9%.
Majority shareholder of the Russian manufacturer AvtoVaz, Renault drops by 10.6%. Russia is the second market of the French group. The Stoxx 600 banking and automotive indices show the two largest sectoral declines in Europe, dropping 5.4% and 4.5% respectively.
Defense values are sought after as 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 the country will henceforth devote at least 2% of its GDP to expenditure in the defense sector. Thalesadvance of 12%, Dassault Aviation by 8% and Aegis by 15.9%.
Powell stuck between inflation and growth risk
While traders continue to expect a normalization of monetary policy from the US Federal Reserve, some believe that the central bank will not opt for a 50 basis point hike in the Fed funds rate in March amid weakening risks. economy and soaring prices. Jerome Powell’s speech in the context of his semi-annual hearing before both chambers of Congress this week should shed some light on this point.
On the bond market, the yield on the US 10-year bond eased by 6 basis points to 1.9078%. That of the German Bund with the same maturity fell by 4 basis points to 0.19%. The dollar is also sought after at the expense of the euro and the pound sterling.