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European Stocks Slump; Investors Flee After Russia Invades Ukraine

Stock Markets Feb 24, 2022 09:18
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By Peter Nurse -- European stock markets slumped Thursday after Russia launched an invasion of Ukraine, turning a diplomatic crisis into an all-out war.

By 3:45 AM ET (0845 GMT), the DAX in Germany traded 3.5% lower, the CAC 40 in France dropped 3.2% while the U.K.’s FTSE 100 fell 2.8%.

Russian President Vladimir Putin announced earlier Thursday a military operation in eastern Ukraine, stating he was supporting separatists in the Donbas region while claiming he did not plan to occupy the country. 

However, the Ukraine government in Kyiv has called it a “full-scale invasion,” with military facilities, including airfields and anti-aircraft systems, targeted, and has declared martial law.

Global stocks have been on tenterhooks for weeks as Russia massed troops on the Ukrainian border, with investors trying to guess the full extent of Putin’s intentions.

The move was roundly condemned by Western leaders, and the market now awaits the full extent of the sanctions on Russia that are certain to follow and the potential impact they will have on global growth.

These geopolitical risks are to the fore of investors’ thinking Thursday, but the earnings season is also progressing with a number of European heavyweights having reported results.

Anheuser-Busch InBev (BR:ABI) stock rose 0.8% after the world's largest brewer forecast its profit would increase in 2022, after ending 2021 with stronger results than expected.

AXA (PA:AXAF) stock fell 4% despite Europe’s second biggest insurer more than doubling its profit from last year, amid fears the conflict would prompt additional claims.

Deutsche Telekom (DE:DTEGn) stock fell 3.9% despite reporting strength at its U.S. unit, T-Mobile, along with growth in European business.

Accor (PA:ACCP) stock fell 4% with the travel and leisure sector hit hard by today’s news, even as Europe's biggest hotel group said its core earnings swung back to profit in 2021.

WPP (LON:WPP) stock fell over 6% despite the world's largest advertising group reporting sales growth of over 12% last year while launching a new $1.1 billion share buyback for 2022.

Elsewhere, Uniper (DE:UN01) stock fell over 10% to a 14-month low as the German utility has substantial business in Russia and is one of the financial backers of the Nord Stream 2 gas pipeline, work on which was halted on Wednesday.

Oil prices surged, with the Brent contract briefly topping $100 a barrel for the first time since 2014, after Russian troops moved into Ukraine, raising fears that global energy supplies will be disrupted.

So far, the Western powers have kept clear of the energy market for their sanctions on Russia, but more severe punishments now look likely. This means European countries are likely to have to look elsewhere for their energy supplies, further straining a tight market.

By 3:45 AM ET, U.S. crude futures traded 6.1% higher at $97.76 a barrel, while the Brent contract rose 5.9% to $99.62.

Additionally, gold futures rose 1.8% to $1,945.60/oz, while EUR/USD traded 0.7% lower at 1.1239.

European Stocks Slump; Investors Flee After Russia Invades Ukraine

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