Mood fearful despite peace talks
Russia’s invasion of Ukraine started one week ago and with the way things are going, it looks as if the violence will continue. Stock markets in Europe are down again as the continuation of the conflict is hurting sentiment. A few hours ago, representatives from Ukraine and Russia commenced talks, but that has done little to help ease traders’ fears. Earlier today, France’s Emmanuel Macron had a discussion with the Russia’s President, Vladimir Putin, and the Russian leader gave off the impression this conflict will not be ending anytime soon. Macron cautioned that people should prepare for the worst, and that update is dictating the state of the markets. Eurozone indices like the DAX and the CAC are firmly in the red, and the benchmarks are close to retesting their recent lows. The FTSE 350 mining sector is down over 9%, as the Russian mining company, Polymetal International, has lost over 40% of its value in one day. In London, it is a broad-based selloff as, travel, healthcare, industrial and banking stocks have all declined. Over on Wall Street, the S&P 500 is down 0.6% as the selling pressure isn’t as intense, after all, the US is geographically removed from the conflict zone.
The euro is lower against the Swiss franc, the pound and the US dollar as dealers want to cut their exposure to the single currency for fear that parts of continental Europe might be plunged into darkness should Moscow lash out and cut energy supplies.
Only a few weeks ago, the US 10-year yield was above 2%, but now it has dropped to 1.866% - this is a result of traders’ desire to purchase government bonds as they are considered to be lower risk. The fight to quality play is assisting gold too as the metal us up $8. There continues to be a squeeze on palladium as Russia is a major producer of the metal. There are concerns that governments and companies will turn their back on Russia because of the war. The oil market underwent a volatile ride today as WTI hit its highest mark since 2011 before pulling back. Russia is a major exporter of energy, but some potential customers are avoiding doing business with the state as they don’t want to be seen to be dealing with an aggressor.