(Paris) The strengthening of financial sanctions against Russia, including the exclusion of the country’s largest banks from the Swift system, caused markets to fall on Monday, the situation causing a sharp rise in commodities.
Wall Street reacted in turn to the opening to the announcements of the weekend. The flagship index, the Dow Jones, fell sharply by 1.14% around 10 a.m., the broader S&P 500 index by 1% and the technologically colored NASDAQ fell by 0.26%.
European stock markets fell sharply: Frankfurt lost 2.04%, Paris 2.63%, Milan 2.93%, and London 1.28%. The benchmark European index, the Eurostoxx 50, dropped 2.68%. The Moscow Stock Exchange was closed on its side, on the decision of the Russian Central Bank which fears to see the Russian titles collapse.
Westerners, joined by Japan, have notably decided to exclude many Russian banks from the Swift interbank platform, which allows financial institutions to communicate quickly and securely about transactions.
As a result, “Russia has isolated itself from Western financial markets and is gradually being left behind, beyond the reach of essential transactional networks,” says Susannah Streeter, an analyst at Hargreaves Lansdown.
The Russian Central Bank’s access to capital markets has also been restricted as the European Commission president wants to ‘cripple’ its assets, causing the ruble to fall to all-time lows against the dollar and euro on Monday. .
Shortly before the opening of Wall Street, Washington banned with immediate effect any transaction with the Russian monetary institution.
Concretely “no G7 bank will be able to buy Russian roubles”, specifies Michael Hewson, who fears “a huge inflationary shock in Russia”.
The Russian Central Bank has announced that it will raise its key rate very sharply, by 10.5 points to 20%, “and has ordered Russian exporting companies to sell 80% of their foreign exchange earnings on the market in an attempt to support the ruble”, points out Susannah Streeter of Hargreaves Lansdown.
Russian and Ukrainian delegations began talks on Monday to try to end the war in Ukraine, on the fifth day of the invasion of Ukraine.
Raw materials are on the rise
Around 2:50 p.m. GMT, a barrel of WTI oil jumped 3.74% to around 95 dollars and that of Brent 2.75% to 100.62 dollars.
On the European natural gas market, the benchmark contract soared by 12.26%.
Other raw materials also soared: soft wheat took 4.39%, palladium 6.29% and aluminum broke a new record at 3525 dollars per ton. Russia and Ukraine are key countries for the supply of crucial raw materials.
Companies dependent on these supplies fell sharply: TotalEnergies fell by 6.80% and, in the mining sector, Polymetal lost 52.66%, Petropavlovsk 24.13% and Evraz 26.45%.
The oil company BP (-5.94%) withdrew from the Russian giant Rosneft (-39% in its listing in London), in which it held a 19.75% stake.
According to the European Union, around 70% of the Russian banking sector is currently excluded from the Swift system. The European Central Bank has noted the “bankruptcy or probable bankruptcy” of the European subsidiary of the Russian bank Sberbank, due to “significant” withdrawals. In London, where part of its capital is listed, Sberbank fell by 70%.
Around 2:45 p.m. GMT, European banks suffered: Societe Generale lost 11.5%, BNP Paribas 8.28%, Commerzbank 8.62%, Deutsche Bank 6.77%, Unicredit 12.29% and the Austrian Raiffeisen 19.4%.
Air in tension
Russia announced Monday to restrict flights by airlines from 36 countries in response to the closure of the airspace of many states to Russian planes.
In the wake of these announcements, companies in the airline sector fell sharply. In Frankfurt, the world number 1 in tourism TUI fell by 6.5% and EasyJet by 5.75%. In Paris, Airbus lost 3.54%, in London, IAG, parent company of British Airways, fell by 4.35%.
The wanted dollar
The euro fell sharply against the dollar, considered a safe haven in times of uncertainty, and traded at 1.1229 dollars (-035%) around 2:40 p.m. GMT. Investors were also turning to government bonds to reduce their exposure to risk. The interest rate on the US 10-year debt fell by eight basis points to 1.88%. Gold also benefited (+1.33% to 1914 dollars an ounce).
Bitcoin rose 4.88% to $39,255.