Global markets fall as Russian-Ukrainian tensions hit stocks | Stock markets

Around £42bn was wiped off the value of London’s top 350 listed companies on Monday as growing fears of an imminent Russian attack on Ukraine sparked a global selloff in shares.

European stock markets fell sharply, following losses in Asia-Pacific markets, as geopolitical tensions pushed oil prices to seven-year highs.

The FTSE 100 index lost 1.7%, or 129 points, to close at 7,532 points, its biggest drop since the crisis rocked the markets three weeks ago. Airline group IAG, which owns British Airways, fell 5.6%.

Financial stocks were also hit, with Barclays down 5.1%, and Lloyds Banking Group and NatWest losing around 4.1%, with the blue chip index losing more than £34bn, moving away from the two-year high set last week.

The FTSE 250 index of mid-sized companies lost 1.95%, or £7.7bn, with Eastern European airline Wizz Air down 6.3% and cruise line Carnival 4 .8%.

There were heavy falls across Europe amid fears the region’s energy supply could be cut off if Russia were to invade Ukraine.

Germany’s DAX index and Italy’s FTSE MIB both lost 2%, while France’s CAC closed down 2.3%. The sale came as German Chancellor Olaf Scholz visited Kyiv on Monday and will travel to Moscow on Tuesday, warning that an attack by Russia would lead to the immediate imposition of “tough sanctions”.

“Just as the Covid storm seemed to be receding, the growing expectation of an invasion of Ukraine is the new threat now worrying investors,” said Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown. “Energy markets are clearly on edge and if supplies are threatened, there is a risk that oil could rise even higher, adding price pressure for businesses.”

Heightened expectations of a Russian invasion of Ukraine pushed the price of Brent crude oil above $96 a barrel for the first time since September 2014, before falling back to $94.50.

Analysts have warned that oil could soon cross the $100 mark as tensions rise, with the price of oil already up more than 20% since the start of 2022. Natural gas prices have also risen, with the UK contract for next day delivery up 4%.

oil graphic

Russia is responsible for a third of Europe’s natural gas and about 10% of world oil production.

Craig Erlam, an analyst at Oanda brokerage, said the Ukraine crisis has accelerated the movement of crude prices toward $100 a barrel as the oil market is “extremely tight right now” and the OPEC oil cartel is not had not reached its quotas.

“Demand growth is strong and OPEC+ continues to miss its production targets. Rather than closing in, the gap is even widening. We don’t need OPEC+ to expand targets – it is time for unilateral action from Saudi Arabia, which would have the ability to ease the pressure. Until then, hope rests on a nuclear deal between the United States and Iran. In the absence of either, triple-digit oil looks very possible,” Erlam predicted.

The oil price jump threatens to push fuel prices higher in the coming weeks, with UK petrol prices hitting record highs over the weekend.

“The big problem for consumers will be the question mark over rising energy prices. How far can they go; what additional pain can be inflicted at a time when many people are already struggling with rising costs?” said Danni Hewson, financial analyst at AJ Bell.

“Although the price of a barrel of oil has retreated from previous highs, that will be little comfort to drivers heading to the pumps tonight and wincing at the numbers displayed on the screen.”

Nervous investors rushed into safe-haven assets such as the US dollar, sending the pound tumbling to a one-week low of around $1.352.

The fall in European stock prices followed a sell-off in Asia. Hong Kong’s benchmark Hang Seng fell around 1.4%, while Japan’s Topix and South Korea’s Kospi closed down 1.6%.

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Stocks plunged in New York, adding to losses on Friday night when the United States warned there was a “very distinct possibility” of a Russian invasion of Ukraine in the coming days. The Dow Jones index of the top 30 U.S. companies was down 0.5% by midday, while the technology-focused Nasdaq recovered about 0.6%.

“Markets are bracing for the risk of war in Europe, and that adds to the complex of issues that are currently generating uncertainty and volatility in global markets,” said IG analyst Kyle Rodda. “The concern is about the impact such a conflict will have on fragile energy markets, European economic growth and the wider financial system if sanctions are imposed on Russia.”

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