Thursday’s big pattern in the financial markets after the Russian invasion of Ukraine? The closer to the fire, the greater the damage. The biggest victim was Russia itself. But that doesn’t mean there wasn’t damage elsewhere. The European equity markets turned a deep red, with the banking sector taking the lead, where the losses were very significant. And in the United States, Wall Street was down, but the damage was already much less.
First Russia: Nearly half of the RTS stock index fell in Moscow on Thursday morning, ending the day 40 percent lower. The Russian ruble lost 7 percent, trading at 87.22 rubles per dollar – the lowest level ever against the dollar. The Russian population is already dealing with an inflation rate of 8.7 percent. Higher import prices as a result of the weak ruble could push inflation up further, especially if imports themselves become scarcer as a result of sanctions. The Russian central bank has announced that it will intervene in the exchange rate of the ruble and, in theory, has ample foreign exchange reserves in reserve. But that did not stop the fall of the currency so far.
Rising energy prices
On the European financial markets, the Russian invasion led to a further rise in energy prices. Brent oil rose more than 6 percent per barrel in price, touching $100 for the first time since September 2014. The price of gas exploded on Thursday, and that does not bode well for households and businesses. The price of the next futures contract for March, for gas per megawatt hour, exploded: from a close of 80 euros on Wednesday, gas opened on Thursday morning at 120 euros and closed the day at 136 euros. By way of comparison: a year ago the gas price was still 17.60 euros. The sharp rise in energy prices could cause the already high inflation to rise further in Europe, and perhaps last longer.
Deutsche Bank even lost an eighth of its value at 12.5 percent.
On the stock markets, prices fell sharply in almost all sectors (not those of oil companies), but a leading role was reserved for the banks. They suffer the most from the financial sanctions that the EU would impose, and have very little or no access to loans or deposits that they have in Russia. The largest fall in the AEX index was ING, which closed 9 percent lower by a hair. French banks were also hit, with a price drop of 12 percent for Société Générale. Deutsche Bank, which does a lot of business in Eastern Europe, even lost one-eighth of its value at 12.5 percent. In Switzerland, UBS fell 8.8 percent.
Cool Response VS
The European stock exchanges, for example, ended in a minus, with a loss of 2.7 percent for the AEX index at 708.55 points. That is the lowest close since May last year. Paris and Frankfurt finished around 4 percent. Although many technology funds showed recovery during the day. Payment company Adyen initially plummeted by 8 percent, but eventually managed to close 1.2 percent higher. That had a lot to do with the fairly cool reaction of the US stock markets, which are furthest from the battlefield. In particular, the Nasdaq index, in which technology funds weigh heavily, showed a mild loss of 0.7 percent in the course of the evening. As if the new world of web and meta-verse cares less about the situation than the old one, with its guns and tanks.
#Russian #invasion #reverberates #internationally #stock #exchanges