December 8, 2022

European shares open lower as pressure builds on Russia's financial system

European shares open lower as pressure builds on Russia’s financial system

European stocks fell and oil prices rose after Russian President Vladimir Putin put his country’s nuclear forces on high alert and Western powers imposed sanctions on Russia’s central bank in response to the invasion of Ukraine.

The regional Stoxx 600 index opened 1.3 percent lower, after rising on Friday. A sub-index of European banks fell more than 5 percent in early trading. Germany’s Xetra Dax lost 2 percent and London’s FTSE 100 index fell 1 percent.

Hong Kong’s Hang Seng Index fell 1.6 percent to its lowest level in nearly a year.

Brent crude, the global benchmark for oil, rose 4.6 percent to $102.43 a barrel. Meanwhile, futures contracts tied to TTF, the wholesale price of natural gas in Europe, rose 24 percent to 115 euros per megawatt-hour.

ruble By up to 29 percent to nearly 118 against the US dollar on Monday morning. Then the Russian Central Bank more than doubled interest rates to 20 percent and banned foreign sales of Russian securities in an attempt to stem the fallout from the sanctions.

Global stocks rose on Friday in a move analysts attributed to sanctions imposed on Russia to move away from targeting the country’s energy exports. But the mood of the market fell over the weekend with Putin Nuclear Forces Mode On high alert, American and Western allies expelled some of Russia’s lenders Quick Bank Payments System.

Traders on Monday pulled out of non-standard stock trades, bought haven assets including dollars and long-term government bonds, and exited bond trades they were holding as bets for central banks raising interest rates.

“Investors are reducing their active bets,” said Michael Metcalfe, head of macro strategy at State Street. “Now is the time to assess and reduce positions and try to assess all the possible consequences that could arise” from the geopolitical situation, he added.

The dollar index, which measures the greenback against six major currencies, rose 0.5 percent. The 10-year US Treasury yield fell 0.07 percentage points to 1.91 percent.

The yield on the two-year US Treasury fell 0.09 percentage point to nearly 1.5 percent, reflecting a significant rise in the price of debt. The German five-year bond yield fell by the same amount to -0.08 per cent.

In a note to clients, Barclays economists commented that the ECB was prepared to “consider any further increase in inflation,” which hit a record high in the eurozone in January, “and act to mitigate the negative growth consequences of the conflict.”

The FTSE Emerging Markets Index also outperformed on Monday, falling just 0.3 percent, as investors retreated from popular trade On the basis of betting on developing economies that are still affected by high rates of the Corona virus.

“If investors have large positions away from their target index, those positions may feel very risky at the moment,” Metcalfe said. “One of the active bets that many have bet on is being underweight [emerging markets] Slightly perverted they have to buy back.”

Meanwhile, the Grain shipments may be disrupted From Ukraine and Russia, which together account for nearly 30 percent of global wheat exports, pushed futures prices higher.

Chicago-traded wheat futures rose 9.2 percent to $9.20 a bushel, close to a 13-year high on Friday.

Elsewhere, shares in BP fell 3.9 per cent after the British group said at the end of the week that it would do so stripping Nearly 20 percent of its stake is in the Russian state oil company Rosneft.

Futures markets indicated that the US S&P 500 stock index will fall 1.5 percent in early New York trade.

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