Financial Markets Vulnerable to War in Ukraine-March 08, 2022 00:07

Headquarters of Russian oil producer Rosneft in Moscow on April 18, 2021 (AFP / Kirill KUDRYAVTSEV)

Headquarters of Russian oil producer Rosneft in Moscow on April 18, 2021 (AFP / Kirill KUDRYAVTSEV)

The market showed vulnerabilities in the face of the war in Ukraine on Monday, but could not predict the evolution and economic impact of the conflict causing soaring commodity prices and high volatility.

After falling more than 4% at the beginning of the day, some European indices made a slight foray into the green and finally ended in red. Frankfurt was down 1.98%, Paris was down 1.31%, Milan was down 1.36% and London was down 0.40%.

In New York, Wall Street ended in a serious decline and was concerned about the impact of Ukraine’s economy and war on inflation and sanctions. The Dow Jones Index fell 2.37%, the Nasdaq plunged 3.62%, and the S & P 500 fell 2.95%.

Surprised by the debate over the possibility of banning Russia’s oil imports in response to the Ukrainian invasion, the European index was surprised after the announcement of a meeting between Russian and Ukrainian diplomatic leaders scheduled for Thursday in Turkey3. A slightly relaxed Russian-Ukraine negotiation session begins on Monday night in Belarus, dedicated to the humanitarian corridor.

This ended with some “positive results” at the end of Monday, announced on Twitter by Ukrainian delegation member Mihailo Podriak.

Investors also noted the statement by German Prime Minister Olaf Scholz that fossil fuel imports from Russia are “essential” to Europe’s “citizen’s daily life” and supply to the continent cannot be guaranteed at this stage. ..

Concerns over Russia’s embargo on crude oil imports and further rises in oil prices in the US market accelerated losses at the end of the session.

However, US President Joe Biden “has not made a decision at this stage” about such an embargo, the White House said.

Soaring raw materials

Under these circumstances, oil prices continued to rise on Monday.

Brent’s barrel from the North Sea, which was approaching $ 140 at the start of the Asian session, then receded, but still ended at 4.31%, $ 123.21.

Changes in European natural gas prices in the Dutch TTF market (Euro per megawatt hour (AFP /))

Changes in European natural gas prices in the Dutch TTF market (Euro per megawatt hour (AFP /))

The West Texas Intermediate (WTI) barrel closed at $ 119.40 at the April delivery, rising 3.21% after surpassing $ 130 at the start of the session.

Benchmark European gas contract prices rose 11.66% after setting a new record at € 345 per megawatt hour.

Metal prices continued to rise, with aluminum prices surpassing the $ 4,000 per ton standard for the first time. Nickel, like copper and palladium, has reached a historic high of $ 55,000 per ton.

Wheat milling has reached € 435 per ton in the European market.

In this regard, investors are afraid that rising energy and commodity prices will further increase inflation, which is already a concern, causing companies to suffer from these price increases and increase costs.

According to some market observers, the crisis should not question the normalization of monetary policy by the European Central Bank meeting on Thursday, but it could postpone it.

Changes in the price of 1 ounce of gold from January 1, 2020 to March 7, 2022 (AFP /)

Changes in the price of 1 ounce of gold from January 1, 2020 to March 7, 2022 (AFP /)

After surpassing $ 2,000 per ounce for the first time since August 2020, gold traded at $ 1,996.81 per ounce just before 10 pm Greenwich Mean Time.

The dollar rose 0.67% against the euro. Previously, European currencies temporarily fell 1% against the greenback.

The Russian currency melted 16% to 139.29 rubles after converting 177.26 rubles to the dollar. This is the lowest ever.

Many declining sectors

“All companies exposed to Russia are sold as if they were suddenly infected with plague or cholera, even in the case of simple financial contact …” Fidelity International wrote in a memo.

Commerzbank logo in Frankfurt, February 2021 (AFP / Armando BABANI)

Commerzbank logo in Frankfurt, February 2021 (AFP / Armando BABANI)

Bank insurance, such as Allianz (-2.83% to 183.22 euros), Commerzbank (-5.19% to 5.64 euros, MDax), Deutsche Bank (-2.77% to 8.90 euros), Munich Re (-4.45% to 209.15) Was ignored again. Euro) Sinked more than 4% in Frankfurt or Societe Generale and BNP Paribas.

In tourism, Air France-KLM fell 6.07% to € 3.30 and Accor Hotel Group fell 7.12% to € 24.25. In London, easyJet plunged from 7.53% to 439.50p and IAG plunged (5.86% to 116.24p). In Dublin, Ryanair fell 7.79% to € 12.25.

In New York, Delta Air Lines (-12.78% to $ 30.11) and United Airlines (-15% to $ 31.20) fell as kerosene costs could skyrocket.

In Frankfurt, Adidas lags behind (-5.40% to 176.90 euros). The group has achieved less than 3% of its sales in Russia, but has not yet contacted about the continuation or discontinuation of its activities in Russia. Rival Puma, which announced it would suspend them on Saturday, fell 3.99% to € 64.98.

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