Black week for European stocks – 2022-03-04 at 18:21


EUROPEAN STOCK MARKETS END DOWN

Letitia Volga

PARIS (Reuters) – European stocks plunged again on Friday as fears of a war in Ukraine sparked a massive sell-off in global equities in favor of government bonds, the dollar and other safe-haven assets.

In Paris, the CAC 40 fell 4.97% to 6061.66, its lowest close since March 31, 2021.

British Footsie lost 3.48% and German Dax lost 4.41%.

The EuroStoxx 50 lost 4.96%, the FTSEurofirst 300 lost 3.61% and the Stoxx 600 lost 3.56%.

The latter posted a 7% weekly decline and CAC 40 down 10.2%, their worst weekly performance in two years.

The MSCI All Country World Index fell 1.8%, down more than 10% year-to-date.

At the European close, Wall Street’s major indexes were down 1.21% to -1.82%.

This morning’s announcement that Russian forces had seized Europe’s largest nuclear power plant in Ukraine, near which a fire had broken out, sparked a significant increase in risk aversion.

Fighting between the two sides continues as the Russian army surrounded and shelled several Ukrainian cities at the start of the second week of an assault launched by Russian President Vladimir Putin.

“You have a growing inflationary risk, you have a huge uncertainty about what will happen in Ukraine, and a Russian president who does not exclude the presence of nuclear weapons is quite a toxic background,” said Michael Hewson, an analyst at SMS Markets.

The EuroStoxx 50 volatility index added 22.72% on the day and exceeded 45 points for the first time since April 2020.

VALUES

On the stock market, all sectoral Stoxx indices closed in the red, with the most notable drop affecting the banking sector (-6.66%), in particular, its positions in Russia and the automotive sector (-5.6%).

Shares of Societe Generale fell 10.03% and are now down more than 40% from their peak in mid-February.

Shares of Michelin fell 7.16%, the lowest in more than a year, after announcing the halt of several production lines hit by supply problems linked to the conflict in Ukraine.

A single CAC value in the Thales green zone took 0.8%.

Biggest drop in the Stoxx 600, Telecom Italia shares fell 15.56% on full-year results and guidance.

INDICATORS OF THE DAY

In February, the US economy created more non-farm jobs than expected, but the conflict in Ukraine outweighed that good news.

INDICATOR

Germany’s 10-year bond yield fell to -0.109% in session, a month-and-a-half low, and posted its biggest weekly decline since 2011 as the conflict in Ukraine forced investors to rush to safety.

Its US equivalent lost almost 14 basis points to 1.7239%, and Ukraine added a stagnation announcement in the average hourly wage in February.

CHANGES

The dollar, also benefiting from safe-haven purchases, gained 0.87% against a basket of international currencies.

The euro is trading below $1.10 for the first time since May 2020, down 1.39%. Against the Swiss franc, the single currency hit a seven-year low.

“The euro is sort of in the epicenter of risk aversion,” said Mizuho’s Neil Jones.

Given soaring energy prices and the European Central Bank’s reluctance to change its interest rate policy, “the euro’s downtrend is likely to continue,” he added.

BUTTER

Oil prices rose by more than 3% due to fears of disruptions in supplies from Russia.

Brent is trading at $114.1 a barrel, while US light oil is trading at $111.36.

(Laetitia Volga, edited by Jean-Stefan Bross)

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