Russian invasion of Ukraine: Stock markets fall, raw materials soar

Posted 24 February, 2022

World markets were sailing in the midst of a storm on Thursday after Russia invaded Ukraine, with stock markets falling and raw materials soaring.

Wall Street was in turn shaken by the turn of the Russian-Ukrainian crisis: at the opening, the flagship index, the Dow Jones, fell by 2.46%, the broader S&P 500 index by 2.54%, and the Nasdaq, with technological coloring, by 3.45%.

Around 2:30 p.m. GMT, European stock markets sank to more than 5%, experiencing one of the worst sessions since March 2020 and confinements, such as Milan (-5.18%) and Frankfurt (-5.07% ). Paris (-4.08%) and London (-3.15%) did little better. The Warsaw Stock Exchange, the main financial center of Central and Eastern Europe, fell by more than 10%.

The Moscow Stock Exchange collapsed by more than 35%.

The price of a barrel of oil exceeded 100 dollars, both for the American barrel and that of the North Sea, a first since 2014. Aluminum, wheat, and rapeseed also broke records.

Vladimir Putin launched an invasion of Ukraine on Thursday night, with airstrikes and entry of ground forces from several directions. Russia claimed to have destroyed 74 military installations.

The offensive sparked an international outcry to which Moscow remains deaf.

Massive sale of shares, purchase of gold (+ 2.43% to 1,955.47 dollars per ounce) and government bonds, "the rush to safe havens is underway", notes Susannah Streeter, an analyst at Hargreaves Lansdown. The yield on US 10-year debt fell to 1.91% from 1.99% on Wednesday.

From now on, for the markets, "the main source of uncertainty is how the Ukrainians and the Western powers will react", describes Johanna Kyrklund, head of investment at the asset manager Schroders.

US President Joe Biden is due to address Americans today, according to the White House. The European Union says it is preparing a new set of sanctions, the “most severe ever implemented”.

Raw materials are on fire

The tensions are causing "a shock" globally, "given the importance of Russia and Ukraine for energy and raw materials", said Tapas Strickland of the National Bank of Australia.

The price of a barrel of Brent oil from the North Sea soared 7.69% to 104.29 dollars and that of a barrel of American WTI for delivery in April by 7.52% to 99.00 dollars, a high since 2014.

On the side of natural gas, the reference market in Europe exploded by 50% compared to the previous day. The price of aluminum also hit a record high.

"Rising energy prices are a big headache for Europe since 40% of its natural gas and 30% of its oil come from Russia," said a Swissquote analyst.

Mining groups strongly linked to Russia collapsed in London: Polymetal plunged 43.84%, Evraz 31.63%, and Petropavlovsk 34.66%.

Groups with activities in Russia were particularly affected in the markets. In Frankfurt, Uniper, linked to the Nord Stream 2 gas pipeline, yielded 17.07%.

Defense stocks were the few to escape the slump, such as Thales (+4.15%) in Paris, Lockheed Martin (+2.28%) in New York, or BAE Systems (+6.03%) in London.

Banks penalized

Banks and the financial sector were targeted by the first sanctions imposed by the European Union and the United States. In Moscow, Sberbank fell by 50%, VTB Bank by 47.46%. In Vienna, Raiffeisen lost more than 20%. In New York, JP Morgan fell by more than 4%.

In Paris, Societe Generale, present in Russia via Rosbank, lost 12.24%. In Milan, UniCredit fell by more than 12.41%, sanctioned for its exposure to Russia, and Intesa Sanpaolo fell by 8.53%.

Fall of the ruble, a jump of the dollar

After a historic low of 90 rubles to the dollar, the currency fell 5.28% around 2:30 p.m. GMT, after the intervention of the Russian Central Bank to "stabilize the situation".

The greenback, considered a safe haven, gained 1.42% against the European currency, to 0.8971 euro for one dollar, its highest since June 2020.

Bitcoin fell 5.96% to $35,300.

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