The main world stock markets fell again this Monday, after the new sanctions imposed on Russia for its attack on Ukraine, amid fears that energy prices will skyrocket and reinforce current inflation.
By 08:55 GMT, European markets were in the red: Frankfurt was down 2.39%, Paris 3.05%, Milan 2.59%, Madrid 1.40% and London 1.54%. The benchmark European Eurostoxx 50 index fell 3.18 percent.
Asian stocks were more resilient: Tokyo rose 0.19%, Shanghai 0.32%, and Hong Kong lost 0.24%.
Commodities shot up again, starting with oil, whose barrel of WTI, the main US benchmark, rose by more than 4% to around 95 dollars.
The Russian offensive against Ukraine, which is resisting attacks, continued on Monday, the day after the president’s nuclear threat Vladimir Putinn, to which European countries responded by promising to supply arms to Kiev. Moscow’s willingness to find an “agreement” with Kiev did not seem sufficient for the moment to reassure the markets.
Western countries adopted harsh financial sanctions against Moscow, especially the decision to exclude numerous Russian banking establishments from the swift platformcrucial to global finance.
This measure “does not block them, but makes them chaotic and unreliable,” explains Ipek Ozkardeskaya, an analyst at Swissquote bank, referring to Russian banks.
The European Central Bank found on Monday that the European subsidiary of the Russian bank Sberbank is in “bankruptcy or probable bankruptcy” due to the “significant” withdrawals of deposits due to the conflict in Ukraine and the sanctions.
The central bank’s access to capital markets has also been limited, after the European Commission said it will propose to “freeze” its assets. As a consequence, the ruble plunged more than 20% on Monday around 08:50 GMT.
This means that “no G7 bank will not be able to buy Russian rubles,” says Michael Hewson, an analyst at CMC Markets, who fears “a huge inflationary effect in Russia.”
The russian central bank announced that it will raise its reference interest rate by 10.5 percentage points, taking it to 20%, to face severe economic sanctions.
These financial penalties against Russia could have consequences for inflation outside the country as well.
The conflict is “likely to significantly increase energy prices, which would lead to immediate inflationary effects and a significant brake on world growth,” considers Silvia Dall’Angelo, an economist at Federated Hermes.
the energy shoots up
Oil prices slightly reduced the increase registered shortly before with the Asian stock markets. The barrel of WTI crude rose more than 4% to about 95 dollars and that of Brent 4.41% to 102 dollars, well installed above 100 dollars, a level that it exceeded for the first time since 2014 last week.
In the European natural gas market, the benchmark contract rose 23% by 08:45 GMT.
“The withdrawal of some Russian banks from Swift could lead to a supply disruption in oil as buyers and sellers try to figure out how to organize under these new rules,” said Andy Lipow of Lipow Oil Associates in Houston.
The prices of other raw materials also registered increases: wheat rose 4.48% and palladium, 3.39 percent.
Russia and Ukraine are essential countries for the supply of oil, gas, wheat and other raw materials.
According to the European Union, about 70% of the Russian banking sector is currently excluded from the system Swift.
The actions of several European banks were impacted by it. It was the case of French banks BNP Paribas (-8.53%) and General Company (-9.70%), of the Germans Commerzbank (-7.32%) and Deutsche Bank (-7.06%), or from the Italian Unicredit (-6.82%).
In London, around 09:50 GMT, the share of the British oil group BP fell 6.74% after the announcement that it was withdrawing from the Russian oil company Rosneftof which it controls 19.75% of the capital.
At the currency level, the euro fell against the dollar, considered a safe value in times of uncertainty. The European currency was worth 1.1166 dollars, down 0.90 percent.