Global stock markets fell across the board Friday and energy prices soared as investors feared the risk of an escalation after Russia attacked the largest nuclear power plant in Ukraine.
Europe’s main stock markets closed sharply lower, with Paris down 4.97 percent, its lowest since the first coronavirus lockdown in 2020.
Asian indices had earlier closed sharply lower and Wall Street saw drops of around one percent in mid-day trading — tempered by a solid jobs report.
The euro sank close to a two-year low under $1.10 as the Ukraine conflict clouds the eurozone’s economic recovery from the coronavirus pandemic.
The greenback benefited also from its status as a haven investment.
“Investors have piled out of European stocks this week, accelerating a decline that began at the end of last month, and has accelerated over the last two days,” said analyst Michael Hewson at CMC Markets.
“This morning’s reckless shelling of a Ukrainian nuclear power plant by Russian forces shows that (President Vladimir) Putin is becoming increasingly desperate to obtain a victory in the face of numerous setbacks,” he said.
“These actions are a significant escalation and raise the question as to whether Putin could adopt a scorched earth policy in his attempts to crush Ukrainian resistance,” Hewson added.
European and UK gas prices surged to record peaks Friday on supply disruption fears as a result of key supplier Russia’s ongoing attack on Ukraine.
Europe’s reference Dutch TTF gas price struck 213.895 euros per megawatt hour in afternoon deals, while UK gas prices hit 508.80 pence per therm.
Oil prices shot up again around 3.5 percent on fears of supply disruptions to Russian crude but were well below the almost $120 per barrel reached Thursday.
– ‘Markets ill prepared’ –
Hopes for an Iran nuclear deal that would allow Tehran to restart crude exports to the world market capped crude’s gains, analysts said.
Ukrainian President Volodymyr Zelensky has meanwhile demanded still tougher sanctions against his Moscow foes after Russian forces attacked and seized the Zaporizhzhia nuclear power plant, but Kyiv said no radiation leak was detected.
Western countries have hit Russia’s economy hard including by closing airspace, freezing assets and excluding seven banks from the SWIFT interbank messaging network.
The impact is already impeding Moscow’s ability to shore up the beleaguered ruble and purchase imports.
Russia’s invasion of its neighbour Ukraine has sent global stock markets slumping over the week, during which time commodities including wheat, metals and particularly oil have soared.
That has fuelled concerns that the global economic recovery from Covid-19 will be derailed, especially with surging prices adding to worries about decades-high inflation.
To combat rocketing costs, Federal Reserve boss Jerome Powell this week said he intends to raise US interest rates this month, though he tempered expectations of a half-point rise.
“Markets are ill-prepared for a conflict with all its unknowable consequences,” said Chris Beauchamp, chief market analyst at IG.
He said this is especially the case “when combined with surging oil prices and rising inflation, mixed in with central banks who are not displaying any of the dovishness needed to rescue sentiment.”
In New York, the Dow, S&P and the Nasdaq all fell in mid-day trading as worries about the worsening picture of the Russia-Ukraine conflict overshadowed a strong US jobs report.
US employers added 678,000 workers to their payrolls in February, driving the unemployment rate down to 3.8 percent in a monthly report that was better than expected.
– Key figures around 1650 GMT –
London – FTSE 100: DOWN 3.2 percent at 7,006.99 points (close)
Frankfurt – DAX: DOWN 4.4 percent at 13,094.54 (close)
Paris – CAC 40: DOWN 4.97 percent at 6,061.66 (close)
EURO STOXX 50: DOWN 4.96 percent at 3,556.01
New York – Dow: DOWN 1.2 percent at 33,382.42
Tokyo – Nikkei 225: DOWN 2.2 percent at 25,985.47 (close)
Hong Kong – Hang Seng Index: DOWN 2.5 percent at 21,905.29 (close)
Shanghai – Composite: DOWN 1.0 percent at 3,447.65 (close)
Euro/dollar: DOWN at $1.0917 from $1.1069 late Thursday
Pound/dollar: DOWN at $1.3126 from $1.3350
Euro/pound: DOWN 82.60 pence from 82.89 pence
Dollar/yen: DOWN at 114.69 yen from 115.45 yen
Brent North Sea crude: UP 3.4 percent at $114.24 per barrel
West Texas Intermediate: UP 3.6 percent at $111.57 per barrel
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