The financial markets end in bright red and on the lowest of the session: Paris drops by 3.94%, Frankfurt by 3.85%, Milan by 4.14% and London by 1.72%. In Zurich, the SMI lost 1.04%.
World stock markets suffered heavy losses on Tuesday, hanging on to the intensification of the Russian offensive in Ukraine, which was also soaring the price of oil.
European markets ended in bright red and on the lowest of the session: Paris fell 3.94%, Frankfurt 3.85%, Milan 4.14% and London 1.72%. In Zurich, the SMI lost 1.04%.
After showing resistance at the opening, Wall Street also sank: the flagship Dow Jones index lost 1.80%, the broader S&P500 index 1.47% and the Nasdaq 1.24% around 5:20 p.m. GMT.
The two benchmark oil prices, Brent and WTI, were both above $105 a barrel, beating their highs from last week, with WTI even soaring more than 10%.
“Now is not the time to buy stocks,” said Konstantin Oldenburger, analyst at CMC Markets. “Nobody knows where this war is going (…) nor does it know how the newly imposed sanctions against Russian banks and the economy will affect the European economy. The fear of a recession in Europe is spreading,” he explains.
The Ukrainian army is facing a new offensive by Russian forces on Kiev, Kharkiv, several cities in the country and the large port of Mariupol, the day after initial unsuccessful talks.
Russian forces hit Kiev TV tower confirming escalation of offensive and raising fears of heavy civilian casualties
In response to the conflict, Western sanctions against the Russian economy are increasing and were further discussed at a meeting of finance ministers of the G7 countries on Tuesday.
Once again seized with strong fears, market players abandoned equities to rush towards government bonds, deemed less risky.
The yield on German ten-year debt fell very sharply into negative (-0.08%), a first since the end of January. Ten-year U.S. Treasuries were offering a yield of 1.71% around 5:15 p.m. GMT, the lowest in a month.
Gold, another popular asset in times of crisis, took 1.27% to 1,932.25 dollars an ounce.
Oil and gas are racing
Oil and gas prices were also soaring, with Russian export sanctions “a matter of timing, not probability,” according to analysts like Markets.com’s Neil Wilson.
The barrel of Brent traded at 107.19 dollars (+9.46%), that of WTI at 106.32 dollars (+11.07%) around 5:05 p.m. GMT.
Russia is the second largest exporter of crude oil in the world and accounts for more than 40% of the European Union’s annual natural gas imports.
The International Energy Agency (IEA) announced on Tuesday that its 30 member countries would release 60 million barrels of oil from their emergency reserves to stabilize the market.
On the European natural gas market, the benchmark contract soared 28.18% to 126 euros per megawatt hour. The price had risen to 143.30 euros on February 24.
Other raw materials, such as aluminum or nickel, also remained close to their record.
The automobile and the losing banks
The values most exposed to Russia, the banks, the automobile or the airline sector, continued to unscrew.
In Paris, Renault plunged 11.23%. In Frankfurt, Volkswagen, whose car production at its main plant in Wolfsburg will have to temporarily close from mid-March due to lack of supplies from Ukrainian suppliers, fell 7.62%.
In Germany Commerzbank (-11.20%) or Deutsche Bank (-7.57%) also fell sharply.
The largest Russian bank, the public giant Sberbank, part of whose capital is listed in London, tumbled again on Tuesday (-80.10% pence 0.21 dollar).
The defense is still progressing
Conversely, defense was again sought after, in particular Thales (+5.43%) in France, the German Hensoldt (+20.85%), or BAE (+3.70%) in London. In the United States, Lockheed Martin took more than 3%.
The dollar is strengthening
Around 12:20 GMT, the euro lost 1.07% against the dollar, at 1.1109 dollars, the greenback being considered a safe haven.
The ruble fell another 7.32% against the dollar, after having lost 30% due to the sanctions against Russia.
Bitcoin took 4.20% to 43,430 dollars, after a jump of 6.7% the day before.