Ukraine: world stock markets tumble, worried about a possible recession

The control room of Euronext, the company that manages the Paris Stock Exchange (AFP/Archives/ERIC PIERMONT)

World stock markets fell again on Friday, particularly European indices, as the continuation and intensification of the fighting in Ukraine raised fears of an economic recession in Europe.

Paris fell 4.97% to 6,061.66 points, Frankfurt by 4.41% and Milan by 6.24%, completing their worst session and their worst week since the announcement of the first confinement in March 2020. , they lose more than 10% each.

London, more resilient since the start of the year, dropped 3.48% on the day.

The New York Stock Exchange fell more modestly, the American economy being less exposed to Russia: the Dow Jones lost 0.53%, the Nasdaq dropped 1.66% and the S&P 500, 0.79%.

Another sign of weakness in Europe, the single currency lost 1.36% to 1.0915 dollars around 8:25 p.m. GMT (9:25 p.m. in Paris) after falling to 1.0886 dollars, a level not seen since the first months of the Covid pandemic. -19 two years ago.

The Russian army occupied the Ukrainian nuclear power plant in Zaporozhye (south), the largest in Europe, on Friday, where bombings during the night raised fears of a disaster.

“Putin is increasingly desperate for victory in the face of numerous setbacks and there are few signs that he is inclined to back down,” said Michael Hewson of CMC Markets.

Faced with this stalemate in the conflict, “investors increasingly fear the risks of recession and escalation”, commented Craig Erlam, analyst at Oanda.

“The market anticipates that corporate profits will fall back, it is now integrating elements of recession”, confirms Alexandre Baradez, analyst at IG France.

Safe havens remained at high levels: an ounce of gold was trading at 1,965 dollars (+1.48%). The 10-year US government bond fell to 1.73%, against 1.84% Thursday at the close. The German 10-year rate, which is a reference in Europe, went back into negative territory (-0.08% against +0.02% the day before at the close).

Investors ignored the latest US job market data, which came in above analysts’ expectations.

“For the market, these are indicators from the past that have almost no meaning given the current context,” explains Mr. Baradez.

New surge in raw materials

After a slight one-day respite, oil prices started to rise again on Friday.

The barrel of Brent from the North Sea for delivery in May closed at 118.11 dollars, a level that it had not reached since August 2008, galvanized by the de facto cessation of Russian exports.

In New York, the barrel of West Texas Intermediate (WTI) with maturity in April, jumped 7.43% on Friday, to end at 115.68 dollars, a first since September 2008.

Fear of disruptions to exports from Russia, which provides 40% of European gas imports, pushed Europe’s market benchmark, the Dutch TTF, to a new record high of 213.895 euros per megawatt hour (MWh).

Wheat and maize also broke records on the European market, Ukraine being a central country in the supply of agricultural raw materials.

“The rise in agricultural commodity prices is particularly worrying, given that the last time they reached these levels we had the Arab Spring,” said Michael Hewson.

Nickel, of which Russia is also a major producer, exceeded the bar of 30,000 dollars per ton, a first since 2008.

Exposure to Russia penalizes

The companies most exposed to Russia are necessarily the most penalized. In Paris, Societe Generale fell by 10.03% and Alstom by 9.04%.

In Frankfurt, Uniper, which participated in the construction of the Nord Stream 2 gas pipeline, sold 11.85%. Banks, including Commerzbank (-10.27%), and autos, such as Volkswagen (-6.99%), also suffered.

In Milan, the falls of the operator Telecom Italia (-15.56%), the bank Unicredit (-14.59) or Intesa San Paolo (-7.30%) also weighed on the rating.

Between fuel prices and geopolitical concern, the titles of American airlines fell high like United Airlines (-9.07% to 36.71 dollars) or American Airlines (-7.13% to 14.59 dollars ).

In addition, bitcoin yielded some gains for the week (-6.06%) to 39,545 dollars.

© 2022 AFP

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