London even finishing slightly in the green (+0.13%). Paris and Milan ended a very volatile session sluggish and Frankfurt down a small 0.26%. In Zurich, the SMI gained 0.57%.
European stock markets ended on a cautious note on Tuesday as Wall Street traded in the red pending announcements of sanctions once morest Russia following Moscow recognized pro-Russian separatist regions in eastern Ukraine.
After a sharply lower opening, European markets finally relaxed, with London even ending slightly in the green (+0.13%). Paris and Milan ended a very volatile session sluggish and Frankfurt down a small 0.26%. In Zurich, the SMI gained 0.57%.
The American indices evolved in the red while the situation appeared on the razor’s edge in Ukraine: the Dow Jones index lost 1.28%, the Nasdaq 1.4% and the S&P 500 0.87% around 5:55 p.m. GMT.
“As severe as the current escalation is, investors are not concerned that this conflict will have a material impact on economic fundamentals or corporate earnings,” said Konstantin Oldenburger of CMC Markets.
“The foreign exchange market has remained very stable with extremely limited movements of the euro once morest the dollar,” notes Alexandre Baradez, analyst at IG France.
However, NATO said Tuesday to expect a large-scale attack from Russia in Ukraine and put its rapid reaction force on alert to defend the allies.
Russia will evacuate its diplomats from Ukraine, accusing the authorities of this country of not doing what is necessary to guarantee their safety. And the meeting scheduled for Friday in Paris between the head of French diplomacy Jean-Yves Le Drian and his Russian counterpart Sergei Lavrov has been canceled.
The 27 member states of the EU on Tuesday approved a “sanctions package” “unanimously” once morest Russia following its decision to recognize separatist territories in eastern Ukraine. These sanctions “will hurt Russia very badly”, added the head of EU diplomacy, Josep Borrell.
For now, Western sanctions include the “suspension” of the Nord Stream II gas pipeline licensing process and are targeting the Russian financial sector.
The US presidency is also due to make announcements at 7:00 p.m. GMT.
“The severity of the new sanctions and the Russian response to them will determine the economic repercussions of these latest developments,” said Natixis Research CIB in a bulletin.
Heatstroke on raw materials
The big risk for Europe concerns Russian gas supplies.
“The prices of natural gas contracts in Europe have rebounded since Monday but they remain below the average prices observed since January and above all they are moving very far from the peak of stress in December”, notes Mr. Baradez.
Crude oil prices were also soaring but they were already very high before the Ukrainian crisis.
Around 5:45 p.m. GMT, the price of a barrel of Brent from the North Sea took 1.53% to 96.84 dollars, following having
