Europe midday: Stocks lower as Russia renews Ukraine invasion

by | Apr 19, 2022

European shares were still below the waterline on Tuesday afternoon, as Russia started its assault on eastern Ukraine and more hawkish comments from US federal Reserve officials dampened sentiment.
The pan-European Stoxx 600 was last down 1.12%, with all major regional bourses lower.

Germany’s DAX was 0.63% weaker, and the CAC 40 was off 1.1%.

“Despite the public holiday in most of Europe yesterday, this is shaping up to be another volatile and eventful week for global markets,” said FXTM senior research analyst Lukman Otunuga.

“The latest comments from the World Bank have added to the cocktail of caution that will most likely influence sentiment over the next few sessions.”

The bank cut its global growth forecast for 2022 by nearly one percentage point to 3.2%, from its previous estimate of 4.1%, citing the war in Ukraine, soaring inflation, and the lingering effects of Covid-19 for the serious trimming.

“Later today, the International Monetary Fund (IMF) will release its updated global economic outlook with markets expecting a downgrade for growth this year.

“Such a development may hit investor confidence, sweetening appetite for safe-haven assets.”

Russian forces launched their long-expected offensive in eastern Ukraine after massing troops and artillery there for the past fortnight.

In the US, St Louis Federal Reserve Bank President James Bullard on Monday repeated his case for increasing interest rates to 3.5% by the end of the year on Monday, saying domestic inflation was “far too high”.

“The Bullard comments really encapsulate the quandary that many of the world’s central banks have found themselves in,” said Oanda analyst Jeffrey Halley.

“Having completely missed the ball around transitory versus embedded inflation, there are no palatable solutions/

“Luckily, they have plenty of excuses in the shape of the pandemic and the Ukraine war.”

Halley said central banks could now “play catchup”, hike aggressively and run the risk of recessions – something they had “weaned the world of” since the global financial crisis.

“Getting the pain over and done may be the least worst option.”

In equity news, shares in French reinsurer Scor were down almost 7% after the company said it expects to book charges for claims related to the Ukraine conflict.

E-commerce group THG was more than 5% weaker after the founder of one of its leading beauty businesses resigned and brands complained of late payments, according to a report in the Sunday Times.

Alexia Inge, co-founder of Cult Beauty, which THG bought for £275m last year, emailed staff this month to say she was “exhausted to the bone” and would be leaving the company in what was the “hardest decision” of her life.

On the upside, precision instrument maker Spectris was ahead more than 5% after the company sold its Omega Engineering unit to Arcline Investment Management for $525m (£403m) and unveiled a £300m share buyback.

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