NEW YORK – European and US stocks tumbled as investors monitored the worsening toll of the Russian invasion of Ukraine amid worries over high oil prices.
Brent North Sea crude reached US$119.84 per barrel, the highest level since early 2012, while WTI touched a 14-year peak – but both gave up ground mid-session and finished lower.
Equity markets in Europe and New York rose early in the day, but the rally fizzled amid fresh headlines of carnage in Ukraine and new sanctions against Russia.
Among US indices, the Nasdaq was the hardest-hit, falling 1.6%.
The losses were greater in Europe, with Paris, Frankfurt and London all down at least 1.8%.
“Any rebounds we’re seeing in risk appetite appear more driven by hope than reality and as we’re seeing today, they’re not lasting,” said Oanda’s Craig Erlam.
With more sanctions on Russia in the offing, “I struggle to see market sentiment dramatically improving for the foreseeable future.”
Hopes for a quick end to the war faded as French President Emmanuel Macron said he fears the “worst is to come” after a conversation with Russian President Vladimir Putin.
Russian forces took the Black Sea port of Kherson in southern Ukraine, the first major city to fall after a string of setbacks for Moscow. They also pounded the besieged port city of Mariupol, which is without water or power.
“It feels like more escalation,” said Art Hogan, chief strategist at National Securities, adding that investors are unnerved by the rise in oil prices over worries about the stability of Russian crude production.
“The longer you stay at elevated levels, the more of a drag there is on the global economy,” Hogan said.
Elsewhere, the euro sank to the lowest level against the pound since mid-2016, as the start of a second week in fighting triggered concerns over the eurozone’s economic recovery from the coronavirus pandemic.
“The Russian invasion-induced surge in oil has suddenly undermined European growth prospects,” said Joe Manimbo, analyst at Western Union Business Solutions.
“Soaring energy puts a significant headwind on the economy by dampening growth prospects and intensifying upward pressure on record high inflation.” – AFP, March 4, 2022
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