(Paris) Investors avoided taking any risks in the markets on Tuesday, as a new Russian offensive on Kiev began, causing stocks and bonds to fall and oil to rise above $100 a barrel. .
European markets were anchored in the red: Paris lost 2.13%, Frankfurt 1.83%, Milan 1.94% and London 0.56% around 9:50 a.m. EST.
In the United States, Wall Street held up better, but was still in the red, with a drop of 0.48% for the Dow Jones and 0.24% for the broader S&P 500 index.
The Moscow Stock Exchange was still closed on Tuesday by decision of the Russian central bank, and should remain so all week.
The two benchmark oil prices, Brent and WTI, were both above $100 a barrel, gaining more than 5%.
“The uncertainty about future developments in the war regions, and the spiral of sanctions that is taking place and which has negative economic effects, and not only for the Russian economy”, weigh on investors, comments Jochen Stanzl, for the broker CMC Market.
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.
The Russian army will strike Ukrainian security services infrastructure in Kiev and on Tuesday called on civilians living nearby to flee.
In reaction to the conflict, Western sanctions against the Russian economy are multiplying and are aimed at its “collapse”, according to the French Minister of Economy Bruno Le Maire.
Many companies have announced that they are withdrawing from Russian companies or projects.
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 back into negative territory, a first since the end of January. It had exceeded 0.30% in mid-February. Ten-year U.S. Treasuries were offering a yield of 1.76% around 9:40 a.m. EST, the lowest in a month.
In addition to the uncertainties of the war, investors expect that the new economic difficulties will push the central banks to be more cautious in their policy to fight against inflation and therefore to a lesser rise in their key rates.
Gold, another popular asset in times of crisis, took 0.63% to 1921.20 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 103.82 dollars, that of WTI at 101.40 dollars.
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.
On the European natural gas market, the benchmark contract soared 16.17% to 114.20 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 fell by 6.64%, or nearly 13% in two days. The energy company Engie plunged by almost 10%.
In Germany Commerzbank (-5.59%) or Deutsche Bank (-5.04%) also fell sharply.
Airbus (-5.13%) or the airline EasyJet (-6.90%) also suffered.
Conversely, defense was again sought after, in particular Thales (+7.43%) in France, the German Hensoldt (+21.80%) or the Italian Leonardo (+3.02%)
The dollar is strengthening
Around 8:20 a.m. EST, the euro lost 0.60% against the dollar, at $1.1151, as the greenback was seen as a safe haven.
The ruble fell another 2.56% against the dollar, after having lost 30% due to the sanctions against Russia.
Bitcoin took 6.32% to $44,300, after jumping 6.7% the day before.