The New York stock market ended mixed, weighing the impact of severe financial sanctions from the West to Russia. The Dow Jones index, which opened lower, ended in the red, losing 0.53% to 33,879.55 points. The Nasdaq, also in negative territory at the opening, closed up 0.41% at 13,751.40 units, while the S&P 500 lost 0.26% to 4,373.39 points, recovering during the session.
Asian stocks were more resilient: Tokyo rose 0.19%, Shanghai 0.32%, and Hong Kong lost 0.24%.
At the close of the European markets on Friday, the financial sanctions once morest Russia were less strong than expected, but they tightened over the weekend “and that is what made the market move today,” said Xavier Girard, an expert in financial investments of Milleis Banque.
In Moscow, “if we look at the MOEX index of the Russian Stock Exchange, it fell 27% last week, despite having rebounded 20% on Friday and the Stock Exchange remained closed today,” Girard explained.
Western countries and Japan decided to exclude many Russian banks from the Swift interbank platform.
In addition, the transactions of the Russian Central Bank were blocked by the European foreign ministers, in agreement with the G7 powers.
On Monday, the United States banned any transactions with the Russian monetary institution, doing so shortly before US markets opened. The decision will severely limit Moscow’s ability to use its abundant foreign exchange reserves to buy rubles.
And while stocks fell, commodity markets appeared strong.
“The health crisis revealed a great dependence on China, this crisis shows that we are also too dependent on Russia and as a consequence, prices increase”, observes Xavier Girard.
In the European natural gas market, the reference contract rose 10.33%, to 99.30 euros per megawatt hour.
The price of wheat closed with a new record in the European market, of 322.50 euros per tonne, and aluminum also broke a new record, reaching 3.525 dollars per tonne.
Russia and Ukraine are essential for the supply of crucial raw materials.
The European Union (EU) will deliver weapons to Ukraine and Germany announced a significant increase in its military spending for the coming years.
Following these announcements, defense companies were in high demand. In Paris, Thales gained 11.87% and Dassault Aviation 7.87%. In Frankfurt, Rheinmetall (tanks) rose 24.80% and Hensoldt (radars) 42.57%.
According to the EU, regarding 70% of the Russian banking sector is currently excluded from the Swift system. The European Central Bank has declared the European subsidiary of Russian bank Sberbank “bankrupt or in danger of bankruptcy” due to “significant” withdrawals of funds.
In reaction, in Paris, Société Générale lost 9.89%, BNP Paribas 7.47% and Credit Agricole 4.96%. In Frankfurt, Commerzbank fell 7.33% and Deutsche Bank 5.20%. In Milan, Unicredit was not spared either and fell 9.48%.
Petroleum
Brent crude rose 2.89% and remained above $100 (at $100.82) by 5:45 p.m. GMT.
“The Opec+ meeting arrives on Wednesday,” recalls Xavier Girard. “We are not expecting a revolution, but perhaps an increase in production quotas to balance supply and demand.”
Refuge
The euro was down 0.52% once morest the dollar to settle at $1.1210.
The ruble, the Russian currency, rose by 20.89% to reach 104.4980 dollars the ruble, due to Western sanctions once morest Russia.
And bitcoin also recorded a strong increase, of 9.29%, reaching 40,915 dollars.
