The falls are aggravated in Europe due to the escalation of tension in Ukraine due to a possible invasion by Russia in a week that is also marked by the monetary policy meeting of the US Federal Reserve (Fed), whose conclusions will be known on Wednesday. The two-day meeting of the Fed’s Federal Open Market Committee (FOMC) should serve to make clear what its roadmap is to combat high inflation without excessively penalizing the country’s economic growth.
In addition, analysts value the Ukraine crisis, which Russia could invade at any moment, as an “uncontrollable risk”. Axel Botte, global strategist at Ostrum AM, affirms that the situation in Ukraine is worsening by the moment and “is weighing on the stock markets of the Baltic and Finland, as it is known that troops have been sent to NATO bases in that country.” Germany has joined the US warning Russia of sanctions in the event of an invasion of Ukraine, when gas deliveries from Russia to Germany are currently minimal, “which aggravates the slowdown in the largest economy in the area of the euro, along with the Covid-related restrictions”.
Juan J. Fdez-Figares, an analyst at Link Securities, explains that “investors have been very attentive for days to what may happen in Ukraine, with some of them opting for reduce positions in case Russia finally opts for the conflict. In the next few days we may be able to clear up doubts”. In addition, the tension, in turn, can cause pressure on the price of oil and impact on inflation.
In this context, the Ibex 35 registers its biggest fall since last November 26, precisely on the day the existence of the omicron variant became known and investors were awaiting its evolution. The selective Spanish, with almost all the values in red, collapsed more than 3%, falling to 8,420 points. The rest of the European stock markets also recorded sharp falls, more than 4% for Milan, Paris and Frankfurt, while London fell 2.7%.
The falls in the Old Continent have worsened with the opening of Wall Street, which linked its seventh day of massive sales. The New York stock market has been dragged down by fears of a tightening of the central bank’s monetary policy and its potential decisions on interest rates, which it could raise as early as March. The Nasdaq moved into correction territory last week and is headed for a bear market, while the the S&P 500 this morning was 10% away from its last record.
Likewise, among today’s references, the purchasing managers index (PMI), which reflects that the impact of the new wave contagion caused by the omicron variant and, although weaker than previous ones, has caused a noticeable slowdown in the expansion of the private sector in the euro zone. Specifically, the advance data of the composite PMI for the eurozone stood at 52.4 points, compared to 53.3 in December, its worst reading in eleven months, including a slowdown in the services sector -at its lowest level in nine months-. By contrast, the manufacturing PMI rose to a five-month high.
In this context, the greatest falls were recorded by Grifols and Acerinox, which plummeted more than 7%, followed by IAG, which lost 6.7%; ArcelorMittal, a 6.5%; And Indra, 6%. With almost all stocks posting heavy losses, they were only ‘saved’ from the red Siemens Gamesa, which managed to gain more than 2% and Telefónica, which slightly bounced 0.3%, amid rumors about consolidation in the European market with negotiations between Vodafone Italy and the Italian subsidiary of Iliad.
On the other hand, the price of a barrel of Brent quality oil, a reference for the Old Continent, stood at a price of 87.69 dollars, after falling 0.23%, while Texas stood at 84.87 dollars, after yielding 0.32%. Finally, the price of the euro against the dollar stood at 1.1320 ‘greenbacks’, while the Spanish risk premium stood at 69 basis points, with the interest required on the ten-year bond at 0.609%.