European Shares Sink Over Ukraine Tensions

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    The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 23, 2020. REUTERS/Staff

    Worries that an invasion of Ukraine by Russia is imminent have pumped waves of volatility in markets

    London – Europe’s major markets sank heavily at the open today as fears intensified over a potential Russian invasion of Ukraine, AFP reported.

    London’s FTSE 100 index fell 1.6 per cent, Frankfurt’s DAX dropped 2.7 per cent and the Paris CAC 40 dived 2.9 per cent after sharp losses across Asia.

    “Worries that an invasion of Ukraine by Russia is imminent have pumped waves of volatility in markets, with investors expecting higher fuel prices and more supply chain bottlenecks as a result of the conflict,” said AvaTrade analyst Naeem Aslam.

    “President Joe Biden had a conversation with his Russian counterpart, President Vladimir Putin, but their dialogue failed to bear any fruit.”

    Wall Street fell on Friday (11 Feb).

    Fears of a conflict in eastern Europe also sparked a heavy selloff in Asia on Monday (14 Feb), while oil prices have rebounded sharply with Brent crude topping US$95 (RM398) per barrel — stoking fresh inflationary woes. 

    The prospect of a conflict compounded the gloomy mood after data Thursday (10 Feb) showed US inflation hit a forecast-busting 7.5 per cent in January, ramping up pressure on the Federal Reserve to hike interest rates by more than expected.

    “Just as the storm of Covid appeared to be receding, the growing expectation of an invasion of Ukraine is the fresh threat now unnerving investors, with confidence plunging in many parts of the world,” said Hargreaves Lansdown analyst Susannah Streeter.

    “With worries that inflation is already running far too hot, the possibility Russia troops could move across the border has led to another surge in the oil price to above US$95 a barrel.

    “Energy markets are clearly on edge and if supplies are threatened there is a risk oil will shoot up even higher, adding to price pressures for companies.”

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