Stocks slump and metals surge on Ukraine war fears
German equities hit especially hard as the country relies heavily on Russian gas supplies that are likely to be disrupted in the event of full-scale hostilities
22 February 2022 - 12:34
by Agency Staff
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A trader works at the Frankfurt stock exchange in Frankfurt, Germany. Picture: REUTERS/TIMM REICHERT
London — Stocks slumped and oil surged to its highest in seven years on Tuesday as Europe’s eastern flank stood on the cusp of war after Russian President Vladimir Putin ordered troops into two breakaway regions of eastern Ukraine.
The broader Euro Stoxx 600 fell as much as 1.9% to a seven-month low before clawing back some losses. German stocks, which are seen as more vulnerable due to the country’s heavy reliance on Russian gas supplies, dropped more than 2%.
The US and European allies are poised to announce harsh new sanctions against Russia on Tuesday after Putin formally recognised the breakaway regions in eastern Ukraine, escalating a security crisis on the continent.
The Ukrainian military said two soldiers were killed and 12 wounded in shelling by pro-Russian separatists in the east in the past 24 hours as ceasefire violations increased.
The prospect of a major European war saw investors dump stocks and riskier assets, while metals soared.
Brent crude futures jumped more than $3, or 2.5%, to $99, its highest since September 2014, on worries that Russian energy exports could be disrupted.
Benchmark government debt and gold were also in demand. German government bond yields hit their lowest level since February 4 as the cost of buying the debt soared. Spot gold added 0.1% to $1,908 an ounce, having earlier reached a new six-month high just under $1,913.
The MSCI world equity index, which tracks shares in 50 countries, fell 0.4% to its lowest since January 28.
“Europe is in a very, very uncomfortable situation,” said Michael Hewson, chief markets analyst at CMC Markets. “What you’re getting is a classic risk-off play here.”
US markets were also braced for losses, with S&P 500 futures down 1.4% and Nasdaq futures off 2.1%.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.5% earlier.
“We can be pretty confident that this will put upward pressure on oil markets and will be watching gas prices pretty nervously as we wait to see what sanctions are introduced,” said Kit Juckes, macro strategist at Societe Generale.
Metals shine
Putin on Monday recognised two breakaway regions in eastern Ukraine as independent and ordered the Russian army to launch what Moscow called a peacekeeping operation into the area.
Washington and European capitals condemned the move, vowing new sanctions. Ukraine’s foreign minister said he had been assured of a “resolute and united” response from the EU.
Fears of supply disruptions from Russia sent London-traded aluminium to a more than 13-year high of $3,350 a tonne while benchmark nickel reached the highest since August 2011. Shanghai-traded nickel hit a record high.
The Russian rouble touched a 15-month low early in Asian trading, hurtling below 80/$ before steadying. The rouble has weakened 12% on prospects of a Ukraine invasion, while Russian equities are down by a third.
Other currencies were quieter as traders awaited news of sanctions. The Japanese yen erased earlier gains that took it close to a three-week high of 114.48/$, while the Swiss franc was holding steady near the previous day’s one-month high.
The euro recovered and was little changed after falling to a one-week low of $1.1286. The single currency has been the most volatile since November 2020.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Stocks slump and metals surge on Ukraine war fears
German equities hit especially hard as the country relies heavily on Russian gas supplies that are likely to be disrupted in the event of full-scale hostilities
London — Stocks slumped and oil surged to its highest in seven years on Tuesday as Europe’s eastern flank stood on the cusp of war after Russian President Vladimir Putin ordered troops into two breakaway regions of eastern Ukraine.
The broader Euro Stoxx 600 fell as much as 1.9% to a seven-month low before clawing back some losses. German stocks, which are seen as more vulnerable due to the country’s heavy reliance on Russian gas supplies, dropped more than 2%.
The US and European allies are poised to announce harsh new sanctions against Russia on Tuesday after Putin formally recognised the breakaway regions in eastern Ukraine, escalating a security crisis on the continent.
The Ukrainian military said two soldiers were killed and 12 wounded in shelling by pro-Russian separatists in the east in the past 24 hours as ceasefire violations increased.
The prospect of a major European war saw investors dump stocks and riskier assets, while metals soared.
Brent crude futures jumped more than $3, or 2.5%, to $99, its highest since September 2014, on worries that Russian energy exports could be disrupted.
Benchmark government debt and gold were also in demand. German government bond yields hit their lowest level since February 4 as the cost of buying the debt soared. Spot gold added 0.1% to $1,908 an ounce, having earlier reached a new six-month high just under $1,913.
The MSCI world equity index, which tracks shares in 50 countries, fell 0.4% to its lowest since January 28.
“Europe is in a very, very uncomfortable situation,” said Michael Hewson, chief markets analyst at CMC Markets. “What you’re getting is a classic risk-off play here.”
US markets were also braced for losses, with S&P 500 futures down 1.4% and Nasdaq futures off 2.1%.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.5% earlier.
“We can be pretty confident that this will put upward pressure on oil markets and will be watching gas prices pretty nervously as we wait to see what sanctions are introduced,” said Kit Juckes, macro strategist at Societe Generale.
Metals shine
Putin on Monday recognised two breakaway regions in eastern Ukraine as independent and ordered the Russian army to launch what Moscow called a peacekeeping operation into the area.
Washington and European capitals condemned the move, vowing new sanctions. Ukraine’s foreign minister said he had been assured of a “resolute and united” response from the EU.
Fears of supply disruptions from Russia sent London-traded aluminium to a more than 13-year high of $3,350 a tonne while benchmark nickel reached the highest since August 2011. Shanghai-traded nickel hit a record high.
The Russian rouble touched a 15-month low early in Asian trading, hurtling below 80/$ before steadying. The rouble has weakened 12% on prospects of a Ukraine invasion, while Russian equities are down by a third.
Other currencies were quieter as traders awaited news of sanctions. The Japanese yen erased earlier gains that took it close to a three-week high of 114.48/$, while the Swiss franc was holding steady near the previous day’s one-month high.
The euro recovered and was little changed after falling to a one-week low of $1.1286. The single currency has been the most volatile since November 2020.
The US dollar index held at 96.080.
Reuters
Oil prices hover around $100/barrel on Ukraine
JSE falls as geopolitical tension intensifies
Gold leaps to nine-month high as Ukraine standoff worsens
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