The scenario that everyone wanted to avoid was finally consummated. Russia began bombing Ukraine this Thursday and open warfare on Europe’s eastern border rocked the markets with crushing force. The European stock markets sank more than 5% while gold was claimed as a refuge value against falls of more than 10% of bitcoin.
As on previous occasions, the worst part was taken back by the Moscow Stock Exchange, from which international investors are rushing to withdraw positions. The benchmark MOEX index fell 33.3% while the dollar-denominated RTSI index accelerated to lose 39.4%, although half of its value was diluted in some crosses. And that its opening was delayed due to the Bank of Russia order to ban short positions on their domestic listed companies.
Although the opening’s deepest declines softened somewhat in European stocks, the hit continued to snatch around 4% from its main indices through the close. the pan-european EuroStoxx 50 dropped 3.6%. A scenario that was repeated with greater or lesser severity in the French CAC 40 (3.8%), the German DAX (-4%), the British Ftse 100 (-3.9%) and the Italian Ftse MIB (-4 ,two%). Even the SMI of the Zurich Stock Exchange in neutral Switzerland it yielded 2.7%.
In the case of IBEX 35the decreases reached 2.86%, at 8,198.5 pointswhich they supposed last year lows for the index despite improving its intraday lows. Analysts pointed out that the falls of recent days had already partially discounted the possibility of this outcome, which for the moment has focused on the destruction of defense elements and infrastructures of Ukraine.
Among the most affected stocks within the Spanish index, Santander Bank, which left 7.7%. A percentage that was also approximated Sabadell Bank (-7%). 6.3% lost BBVA and the invoice to CaixaBank reached 5.6% despite the fact that, as explained yesterday by the vice president of the European Central Bank (ECB), Luis de Guindos, neither European nor Spanish banks have significant exposures to the Russian or Ukrainian market.
The setbacks were strongly repeated in other values that, as Amadeus (-2.2%), Inditex (-3.9%) and Fluidra (-0.6%), they do have more presence in Russia. In this sense, the implementation of sanctions from Western countries that could penalize their business or presence in the Eurasian country was the reason for the falls.
The same thing happened for IAG, which fell 5.9% due to the impact that the conflict will have on airlines. Something that spread to the whole of a tourism sector that still had not been able to fully recover from the blow of the pandemic. In addition, several companies were quick to suspend their routes to Ukraine.
Very few securities managed to cushion the blow of Putin’s bombs, as investors also showed their fear of what the effects of sanctions that the international community announced or began to study.
At the head of this block, the renewable given the prospect that its energy production will be more necessary if the supply of gas from Russia suffers. 10.5% increases for Siemens Gamesafrom 10.1% for Solariafrom 4.4% for drive and 0.9% for Iberdrola.
above all of them, Indrawhich rose 12% thanks to its involvement in the defense sector and due to the rebound effect one day after having fallen sharply due to the forthcoming strengthening of the Spanish State’s positions in its capital.
did not have the same fate Telephone, which ended with decreases of 1.8%. And that in spite of having stuck out his chest for a good part of the session shielded by his annual results, with a profit five times higher than a year ago.
The outbreak of the conflict also had a direct impact on the raw materials market. Western Europe’s heavy energy dependency on Russian exports, most of which pass through Ukraine on their way west, resulted in strong advances for the price of natural gas and oil.
The clear possibility that supplies will be cut off, plus the effect of sanctions such as the bye-bye to the Nord Stream 2 pipeline project, have led to the future of natural gas soaring with a force rarely known. The increase was up to 63% in its European reference and more than 6% in the United States.
For his part the Petroleum rose more than 8% and the Brent to exceeded 100 dollars per barrel. A level in intraday maximums that meant a price 66% higher than the one that the Spanish Government estimates in its current General State Budgets. And, in addition, maximums of the last eight years.
You have to go back to the year in which Russia proceeded with the invasion and annexation of the Ukrainian region of Crimea to see Brent trading above 100 ‘greenbacks’. And the effect extended to the West Texas Intermediate barrel as well (WTI), the benchmark in the US, where, between increases of 7%, it also reached this level.
Shelter in gold, fear in wheat
Also shot the Prayed, active shelter par excellence in times of uncertainty. An ounce of the precious metal became more expensive by up to 3% and $1,975 was exceededa level not seen since August 2020. Then, in the midst of the Covid-19 pandemic, investors ran for bullion to shelter their investment.
The increase in the price of this scarce raw material was the most vertical since January 2021. And, in addition, it was repeated in other precious metals such as silver, with increases of 4% that placed the ounce close to 25.7 dollars. They also raised the platinum (+3%) and the palladium it exceeded 2,700 dollars between increases of 10%. In all cases, the rally was reduced after the close of the European stock markets.
The tension was repeated in agricultural raw materials. The wheat, whose global production is concentrated in about a third between Ukraine and Russia, added increases of 6%. And this percentage was added to the price escalation that had already been dragging on in recent weeks.
The fear of scarcity was also felt in the price of the corn, with gains of more than 6% in the Chicago CME futures market. The upward trend was replicated, although more moderately, in other products such as soy wave oatmeal.
Punishment of bitcoin and the ruble
Apart from this trend, the bitcoin it sank to $34,400 with declines close to 10%, in line with other assets considered more risky. Even despite the fact that kyiv approved the use of cryptocurrencies among its population as an emergency measure. A correlation of whose risks several international financial institutions had already been warning lately.
In this way, with the exception of the episodes of comebacks against the current in the midst of the confinement of Europe, the one that was presented as ‘digital gold’ He completely distanced himself from the group of those considered safe haven assets. The same thing happened in the ethereumwith double-digit falls that took its graph to the 2,300-point mark.
In the foreign exchange market, the big blow was taken by the ruble. The withdrawal of positions by international investors from the Eurasian country snatched 6% of its value from the Russian currency against the main currencies, until its lowest historical level. His crossing was hurt to 0.0103 euros and 0.0115 dollars.
Somewhat lighter was the cutout on the ukrainian hryvnia, thanks to the intervention of the authorities of the intervened country. They also acted as a mattress heavy cash withdrawals requested by the inhabitants of the country.
In this sense, kyiv decreed the cessation of all operations with negotiable securities, including those of the stock market, with the sole exception of the issuance of public debt. Also, financial institutions were prohibited the purchase of foreign currency to avoid a collapse of supply of the national currency.
return to fixed income
Along with gold, search for refuge investor found destiny in fixed income of the Old Continent. The inflow of investment money in sovereign bonds translated into a reduction in interest rates that had been increasing in recent weeks due to the imminence of interest rate hikes that the Russian military intervention could put on hold.
The 10-year Spanish bond fell back to rates of 1.16%, levels not seen since the beginning of the month. However, the higher concentration of purchase orders on the German ‘bund’ reduced its yield to 0.15%. That way, the risk premium remained at 101 basis points. Meanwhile, the Italian even continued to exceed 160 points.
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