European equities fell on Monday in volatile trading, rebounding from session lows as Russia eased some fears of an imminent attack on Ukraine.
The regional Stoxx Europe 600 index fell as much as 3 per cent, before recovering to trade 1.8 per cent lower. Germany’s Xetra Dax fell 2 per cent while the Cac 40 in Paris shed 2.3 per cent.
Monday’s moves came after Jake Sullivan, US national security adviser, said on Sunday that an attack by Russia against Ukraine could begin “any day now”, including “this coming week before the end of the Olympics”.
However, Russian foreign minister Sergei Lavrov told President Vladimir Putin in a televised meeting on Monday that diplomatic engagement with the west should continue, something that helped push stocks up from their lows.
“There’s always a chance,” Lavrov said, when asked by Putin whether there was any likelihood that an agreement with the west could be reached in the flurry of negotiations between Moscow and western capitals aimed at defusing tensions on the border with Ukraine.
Wall Street’s S&P 500 share index, which closed almost 2 per cent lower on Friday after the White House issued its first warning of an “immediate threat” of invasion, slipped 0.2 per cent. The technology-focused Nasdaq Composite climbed 0.7 per cent.
Western nations are continuing to withdraw diplomatic and military personnel from Ukraine, and airlines have cancelled flights to the country. The moves have jolted investors who were focused on US monetary policy and viewed geopolitical tensions as less of a risk.
With global supply chains snarled up from Covid-19, all major commodity markets are in a “state of severe depletion”, said Jeff Currie, head of commodities research at Goldman Sachs. “Such depleted systems are highly vulnerable to even the smallest shocks, even [with just] a few days of disruption.”
European natural gas contracts for next-month delivery jumped 7 per cent on Monday to €79.40 per megawatt hour. International oil benchmark Brent crude rose as high as $96.16 a barrel, the highest level in more than seven years, before trimming its gains.
“If western claims of [a] Russian invasion of Ukraine turned out to be unsubstantiated [or] Russia withdrew its troops from its western borders, oil prices will come crashing,” said Tamas Varga at PVM Oil Associates, a broker. “For the time being all eyes are on Ukraine and on the $100-a-barrel level.”
Top-rated European government bonds initially rallied on Monday as traders sought shelter in the lower-risk assets, pushing yields lower. However that move fizzled following Lavrov’s remarks. Germany’s benchmark 10-year Bund yield was recently little changed at 0.28 per cent. The equivalent 10-year US government bond yield rose 0.07 percentage points to 2.02 per cent.
In Asia, Hong Kong’s benchmark Hang Seng fell 1.4 per cent, while Japan’s Topix and South Korea’s Kospi both closed 1.6 per cent lower.
Additional reporting by Tommy Stubbington
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2022-02-14 17:23:18Z
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