European shares tumbled into the red on Thursday as the war in Ukraine worsened and investors digested the possibility of more sanctions against the Russian regime and weak eurozone survey data.
The pan-European Stoxx 600 index was down 0.37% with all major bourses following suit after a weaker performance overnight on Wall Street and mixed markets in Asia.
Sentiment was also hit as Eurozone growth slowed in March, according to a closely-watched survey, as the war in Ukraine weighed heavily.
The S&P Global Eurozone PMI Composite Output Index for March was 54.5, a two-month low and down on February’s 55.5, although it remains the second-strongest expansion since November. It was also above consensus expectations of around 53.9.
Service sector companies benefited from resurgent demand following the easing of Covid-19 restrictions across the bloc. But respondents from both the service and manufacturing sectors reported weakening demand, rising uncertainty, higher costs and renewed supply chain issues since Russia’s invasion of Ukraine at the end of February.
US President Joe Biden arrived in Brussels for meetings of the NATO alliance, G7 and European Union to discuss future steps on assistance for Ukraine and potential measures to hinder Moscow’s ability to fund its unprovoked war on its neighbour.
Splits have emerged among EU leaders over an embargo on Russian energy exports. European gas prices surged after Russian President Vladimir Putin demanded payment in roubles for gas sold to “unfriendly” countries.
”There is little sign the pedal is coming off the accelerator for energy prices, amid a fresh round of volatility that has hit markets after Russia moved to retaliate in the economic war being waged. Oil has climbed upwards again, with Brent crude marching back above $122 a barrel earlier as trade stays highly sensitive to the repercussions of the Ukraine conflict,” said Hargreaves Lansdown analyst Susannah Streeter.
In equity news, shares in UK fashion retailer Next fell as the company cut profit guidance and predicted selling prices would rise by 8% in the second half of the year as it reported a more than doubling of annual profit.
Games Workshop shares soared by 7% as the company lifted its dividend and said trading was in line with expectations.
Shares in Renault, the Western carmaker which has the most exposure to the Russian market, fell after the company suspend operations at its Moscow plant and started reviewing options on its majority stake in Avtovaz, the country’s No. 1 carmaker.
Daimler Truck rose after it said it expected little impact on its business in 2022 from the Covid-19 pandemic and Russia’s invasion of Ukraine, and forecast revenue growth of at least 14%.
