Global stock markets have fallen sharply as fears of a military conflict in Ukraine terrified investors, wiping £53 billion of the value of Britain’s blue-chip stock index.
European markets plunged 3.8% to their lowest level since October, their biggest one-day drop in more than 18 months, after NATO said it was reinforcing its eastern borders with land, naval and air forces as a Russian invasion of Ukraine continues. seemed more likely.
Volatility soared as investors also feared that the US central bank, the Federal Reserve, would raise interest rates several times this year, starting in March, after US inflation hit a 40-year high of 7% in December. had reached.
In the City of London, the FTSE 100 index fell 2.6% to its one-month low, its biggest drop in two months, as Boris Johnson warned that a “lightning war” in Ukraine was possible but not inevitable. The blue chip index lost 197 points and fell to 7,297.
Educational publishing house Pearson led the FTSE 100 fall, down 9%, while Russian steelmaker Evraz fell 8%. Miners, energy producers, travel agents and home builders also fell.
In Frankfurt, the Dax index of leading German companies lost 3.8%, while the French Cac lost 4%.
There were also new heavy losses in New York, where the S&P 500 index of US equities fell 3% early in the afternoon. That brought the S&P 500 more than 10% from its all-time high of early January and into correction territory.
Investors rushed to safe-haven assets such as the US dollar and also the Swiss franc, which hit a six-year high against the euro.
The sell-off of risky assets hit cryptocurrencies, with bitcoin falling to a six-month low of about $33,000 (£24,537), less than half of its all-time high of $69,000 reached last November.
The Fed, meeting this week, could also begin scaling its balance sheet this year, removing some of the stimulus introduced since the start of the Covid pandemic.
“Traders remain in sell mode as fears mount over the situation between Russia and Ukraine,” said David Madden, a market analyst at Equiti Capital. Also in the mix are concerns that the Federal Reserve will release an aggressive update on Wednesday.
The prospect of tighter monetary policy has caused technology stocks to fall, and the Nasdaq Composite Index fell more than 3%, compounding recent losses.
“The double whammy of risk events is proving too much for Wall Street to handle, with the Nasdaq once again taking the lead as the technical trail deepens,” said Fiona Cincotta, senior financial markets analyst at City Index.
“Meanwhile, embassy personnel are being withdrawn from Kiev for fear that Russia may send troops to Ukraine at short notice. Last week’s talks between the US and Russia did not lead to a solution. Fear of war drives risk trading with rising bonds.”
There were heavy sells in the Moscow stock market, with the Moex index of Russian companies falling nearly 6% to its lowest level since December 2020, pushing its loss to nearly 15% by 2022.
The ruble hit a one-year low, falling 2.5% to over 79 rubles against the US dollar. The Bank of Russia said it was halting foreign exchange purchases in an effort to ease pressure on the ruble, which has collapsed amid tensions over Ukraine.
Britain’s FTSE 250 index of medium-sized companies plunged 3.6%, reaching its lowest level since March 2021. Cybersecurity firm Darktrace fell 14.6%, newspaper publisher Reach fell 11%, while cinema chain Cineworld and luxury carmaker Aston Martin fell 8.7%.
Gas prices rose, with wholesale gas prices in the UK rising 17% amid concerns that Russia’s energy supply to Europe could be disrupted.
There were also signs that the Omicron variant had slowed the global recovery. Private sector growth in the UK and the eurozone hit an 11-month low, while US activity grew at its lowest pace in 18 months in January, according to the latest surveys of purchasing managers.