PARIS (Archyde.com) – The main European stock markets are expected to fall sharply on Monday following a weekend marked by continued fighting in Ukraine, new economic sanctions targeting Russia and Vladimir Putin’s decision to place the Russian nuclear deterrent force in a state of combat alert, a series of exceptional factors that fuels risk aversion.
Futures contracts on indices suggest a decline of 3.07% for the Dax Frankfurt, 1.48% for the FTSE 100 London and 3.34% for the EuroStoxx 50. As for the CAC 40 Paris, it might yield around 2.8% according to the first indications available.
In Russia, the ruble fell 30% to an all-time low of 119.50 to the dollar before paring its losses on central bank interventions.
But the latter might see its capacity for action quickly put to the test: the new set of sanctions announced this weekend by the European Union in coordination with the G7 includes the freezing of its assets outside Russia, in addition the exclusion of most Russian banks from the SWIFT international interbank messaging system.
By thus banishing Russia from world financial markets, Western countries obviously hope to exert maximum pressure on Moscow to obtain a halt to the invasion of Ukraine. But this strategy involves risks for their own markets, starting with those of raw materials and energy, and for the world economy, among other things because it is likely to fuel an inflation that is already worrying.
Goldman Sachs has thus just raised its inflation forecast for Europe this year to 5%, while emphasizing that the rise in gas prices would weigh on growth.
All of these factors therefore encourage a retreat into safe havens deemed to be the most solid, such as government bonds, the dollar and gold.
VALUES TO FOLLOW:
A WALL STREET
Futures contracts on the major American indices foreshadow for the moment a decline of more than 1% for the Dow Jones and more than 2% for the Standard & Poor’s 500 and the Nasdaq.
Friday, the New York Stock Exchange ended up sharply for the second consecutive session, confirming its rebound following finishing in the red ahead of the offensive launched by Russia once morest Ukraine.
The Dow Jones gained 2.51%, or 834.92 points, to 34,058.75, its biggest gain since the start of the year. The S&P 500 gained 95.95 points (+2.24%) 4,384.65 and the Nasdaq Composite advanced 221.04 points (+1.64%) 13,694.62. All the major sector indices of the S&P-500 ended the session in the green.
Over the week as a whole, the Dow fell 0.1% but the S&P-500 gained 0.8% and the Nasdaq 1.1%.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index posted a gain of 0.19% following a choppy session, investors being torn between fears linked to sanctions and the hope of a negotiated solution to the conflict in Ukraine .
In China, the Shanghai SSE Composite lost 0.04% and the CSI 300 0.17%. Hong Kong, the Hang Seng fell 0.87% and hit its lowest level since March 24, 2020.
EXCHANGES/RATES
The dollar, the main beneficiary of the rise in geopolitical tension, appreciated by 0.67% once morest other major currencies and in particular the euro, which fell by 0.93% to 1.1162.
On the government side, the yield on ten-year US Treasury bonds fell by more than eight basis points to 1.9044%.
Its decline reflects both renewed risk aversion and the downward revision of interest rate expectations in the United States: the markets are now pricing in a 95% probability of a rise limited to 25 basis points of the rate target for the Federal Reserve’s “fed funds” on March 16 according to the Fedwatch barometer, while the hypothesis of a 50-point rise prevailed before the invasion of Ukraine.
PTROLE
Crude prices are taking full advantage of the multiplication of sanctions targeting Moscow and the nuclear threat brandished by Vladimir Putin.
Brent crude gained 4.79% to $102.62 a barrel following peaking at 105.07 and US light crude (West Texas Intermediate, WTI) jumped 5.57% to $96.69 following rising to 99.10. Both remain below the over-seven-year highs hit last week at $105.79 and $100.54 respectively.
OPEC+, of which Russia is a part, is due to take stock of its strategy on Wednesday but the market does not expect any change in its production strategy.
MTAUX
The price of an ounce of gold is up by more than 1% to 1,908.36 dollars, bringing its rise by more than 6% since the beginning of the month.
The sanctions once morest Russia are also driving up the price of palladium (+6.17%), of which the Russian group Nornickel is the world’s largest producer, like those of aluminum (+4.25%) and nickel (+1 ,50%).
NO MAJOR ECONOMIC INDICATOR THE AGENDA FOR FEBRUARY 28
(said by Blandine Hnault)
by Marc Angrand
