EUROPE FINISHES DOWN, UKRAINE DECLARES STATE OF EMERGENCY
by Claude Chendjou
PARIS (Archyde.com) – European stock markets, with the exception of London, ended in the red on Wednesday after a volatile session and Wall Street was also moving down at midday, fears of a worsening of the crisis with Russia outweighing hopes of a diplomatic solution after the announcement of a cyberattack in Ukraine and the establishment by Kiev of a state of emergency.
In Paris, the CAC 40 ended down 0.1% at 6,780.67 points. The British Footsie, on the other hand, gained 0.05%. The German Dax lost 0.42%.
The EuroStoxx 50 index fell by 0.3%, the FTSEurofirst 300 by 0.2% and the Stoxx 600 by 0.28%.
Several government websites were inaccessible in Ukraine on Tuesday, due, according to the Interfax agency, to a large computer attack.
At the same time, Ukraine announced that it intended to establish a state of emergency on its territory as part of a series of security measures to prepare the country to face a possible Russian offensive.
These two pieces of information weighed on the equity markets, which had regained risk appetite in the morning, with Western sanctions against Russia deemed to be less severe than expected.
Russian President Vladimir Putin further said that the door to diplomacy remained open, offering the market some relief, which however did not last.
A sign of investor nervousness, the Vix US volatility index, also known as the “fear index”, is still well above its long-term average set at 20 points. Its European equivalent ended up 1.4% to 33.4 points.
VALUES IN EUROPE
On the Stoxx 600, while most sectors were in the green in the morning, only three escaped the downward trend at the end of the session: health (+0.11%), utilities (+0.02 %) and non-cyclical consumption (+0.27%).
A few business publications offered some market support. Stellantis, born from the merger of PSA and Fiat Chrysler, jumped 4.5% after saying it expects a double-digit current operating margin this year, after a near doubling in 2021.
Danone, for its part, took 3.8% in favor of a quarterly turnover better than expected despite high inflation. Unilever advanced 1.3% and Nestlé eroded 0.1%.
Elsewhere in Europe, Barclays (+3%) reported annual profit nearly tripling.
The results of Solvay (+1.2%) and Henkel (+2%) were also well received, while those of ASM International (-7.7%), Munich Re (-2.3%) and Puma (-1.9%) disappointed.
A WALL STREET
At the time of the close in Europe, the Dow Jones retreated by 0.02%, the Standard & Poor’s 500 by 0.19% and the Nasdaq by 0.44%.
The rebound in the new technologies compartment at the opening of Wall Street fizzled (-0.2%) with the decline in particular of Apple, Alphabet and Tesla. Eight out of 11 sectors of the S&P-500 are in the red.
Side financial publications, the chain of DIY stores Lowe’s advance of 2.8%, driven by the increase in its forecast of results for this year.
Spectacular drop of the day, Kodiak Sciences plunged 79% after the failure of clinical trials of its experimental treatment for macular degeneration. Its competitor Regeneron gains 1.6%.
THE INDICATORS OF THE DAY
Data released by Eurostat on Wednesday confirmed that the inflation rate in the euro zone hit a record annual rate in January, at 5.1%, mainly due to rising energy prices.
In France, the business climate in industry came out in line with expectations in February with an indicator at 112 points, according to INSEE data.
CHANGES
On the foreign exchange market, the dollar gained 0.12% against other major currencies, after the latest developments in the Ukrainian crisis.
The euro, which hit a low since February 14 at 1.1286 dollars on Tuesday, fell 0.11% against the greenback at 1.1315.
RATE
In the bond market, the yield on ten-year US Treasuries recovered 2.6 basis points, to 1.9738%, after a three-week low, on the back of expectations of a rate hike next month by the Federal Reserve.
In Europe, the ten-year German Bund yield fell 1.6 basis points to 0.224%, following a near three-week low of 0.146%. That of the two years, the most sensitive to changes in rates, took 3.8 points to -0.369%.
Robert Holzmann, member of the Governing Council of the European Central Bank, declared himself in favor of a first rate hike this summer in the euro zone.
The indicator of inflation expectations in five years in the euro zone reached its highest level in almost three weeks at 1.8044%.
“The more tensions escalate, the more energy prices rise and that is inflationary,” said Peter McCallum, rates strategist at Mizuho.
The yield of the French ten-year OAT ended almost stable at 0.7340%.
OIL
Oil prices are also volatile as the situation around Ukraine develops.
The barrel of Brent lost 0.2% to 96.63 dollars after hitting its highest level since September 2014 at 99.50 dollars the day before. US light crude (WTI) fell 0.18% to $91.71 from a peak of $96 on Tuesday.
(Report Claude Chendjou, edited by Bertrand Boucey)