European Stock Futures Lower; Mood Hit by Oil Surge as Ukraine Conflict Deepens

European Stock Futures Lower; Mood Hit by Oil Surge as Ukraine Conflict Deepens

European Stock Futures

European stock markets are expected to open lower on Wednesday, continuing the previous session’s sharp losses with sentiment remaining fragile as the conflict in Ukraine intensifies.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.3% lower, CAC 40 futures in France dropped 0.5% and the FTSE 100 futures contract in the U.K. fell 0.1%.

European equity markets slumped on Tuesday, with the DAX and the CAC 40 both dropping nearly 4%, as ceasefire talks between Russian and Ukrainian officials ended without success while Russian troops bombed a TV tower in Ukraine’s capital Kyiv and rained rockets on Kharkiv, the country’s second-largest city.

Investors could use that sharp selloff to try and pick up bargains Wednesday, but further losses still look likely with a miles-long Russian military convoy north of Kyiv preparing to advance on the capital.

Still, the impact of the severe sanctions imposed on Russian banks by the Western powers was illustrated by Wednesday’s news that Russia’s largest lender, Sberbank, is leaving the European market. The lender said it was no longer able to supply liquidity to its European subsidiary banks which were facing large cash outflows.

Ukraine raised 8.1 billion hryvnia ($277 million) in a sale of war bonds, raising funds to support its fight against Russia’s invasion.

In his annual State of the Union speech late Tuesday, U.S. President Joe Biden said Russia’s Vladimir Putin will pay dearly over the long run for his invasion of Ukraine, even if his military campaign succeeds in the short term.

Back in Europe, German unemployment figures for February are due later in the session, but the main focus will be on the Eurozone CPI release for February. This is expected to continue to rise, to 5.3% year-on-year, from 5.1% in January.

Oil prices soared to seven-year highs, climbing above $110 a barrel, as traders sought out alternate sources of crude in an already tight market, avoiding Russian supply following the sanctions on Russian banks.

These gains come despite Tuesday’s announcement of a coordinated release of 60 million barrels of oil by International Energy Agency member countries.

The market will look later Wednesday to the meeting of the Organization of the Petroleum Exporting Countries and allies, including Russia, together known as OPEC+, for news of future output levels. The group is widely expected to stick to its previously announced plans to add 400,000 barrels per day of supply each month.

Also due later in the session is the weekly U.S. crude inventory from the Energy Information Administration. This follows the industry-funded American Petroleum Institute reporting late Tuesday that U.S. crude inventories fell by 6.1 million barrels last week, a vivid illustration of the tightness of the overall market.

By 2:05 AM ET, U.S. crude futures traded 5.8% higher at $109.36 a barrel, after earlier hitting the highest since September 2013, while the Brent contract rose 5.8% to $111.02, trading above $110 for the first time since July 2014.

Additionally, gold futures fell 0.1% to $1,942.50/oz, while EUR/USD traded 0.2% lower at 1.1101.

The FTSE MIB fell  by 4.14% to 24,368.20. In the cash markets, the DAX  Germany was trading  down by 3.85%  to 13,904.65. CAC 40  in France  fell by 3.94% to 6,396.37 while the FTSE 100  in the U.K. was  down by 1.72% to 7,330.35 ,at the time of writing.

About Author

Related posts

Leave a Reply