Ukraine conflict: Due to the deteriorating situation of the ongoing war between Russia and Ukraine, the stock markets of European countries reached a 1-year low on Friday. The biggest pressure on the market was due to auto and bank stocks, which saw a strong decline. The news of the explosions and fires at Europe’s largest nuclear plant in Ukraine had a huge impact on the market.
The Pan European Stocks 600 (pan-European STOXX 600) index fell 2.59 per cent (5 pm IST), the biggest weekly decline since the pandemic-hit March 2020.
Volatility highest since June 2020
Due to heavy panic among investors, gold and bond prices, which are considered safe haven investments, registered a jump. At the same time, volatility reached 45 points in Eurozone stocks, which is the highest since June 2020.
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Auto-heavy German DAX fell 3.6 per cent to a new one-year low, although it recovered later and was down 3.09 per cent. This was mainly due to a 5.7 per cent fall in car companies, the worst-performing index among European sectors this week.
Big blow to car companies
According to Investing.com, Michael Hewson, Chief Market Analyst, CMC Markets, said, “No one is buying new cars while commodity prices are skyrocketing. Their sales and margins have come down significantly. Consumer disposable income is going to take a hit as food and gas prices remain high.”
Heavy fall in the markets of France, Italy, UK
Other regional indices fell 3.18 per cent in France’s CAC 40, 4.37 per cent in Italy’s FTSE MIB and 2.96 per cent in UK’s FTSE 100.
The European markets, geographically close to Russia, were the focus of selloff due to geopolitical concerns. Euro zone banks fell 4.5 per cent as government bond yields fell as commodity prices rose due to sanctions on Russia.
The sanctions impacted the Dutch bank’s loans of $77 million
Shares of Dutch bank ING fell 6.1 per cent. The bank had said its loans worth 700 million euros ($771 million) were affected by the new sanctions on Russia-focused entities and individuals.
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