European shares fell in “bear market” – E24
Monday started with a sharp fall in Europe. It was almost 2 percent decline on the Frankfurt Stock Exchange which reached over 20 percent from the top.
On the most important stock exchanges in Europe, the week starts largely with declines following reports of a possible trading ban on Russian oil, and subsequent energy price jumps.
This is how Monday ended:
- The DAX in Frankfurt fell 1.96 percent
- The FTSE100 in London fell 0.4 percent
- CAC40 in Paris fell 1.31 percent
- IBEX35 in Madrid fell 0.74 percent
- FTSEMIB in Milan fell 1.36 percent
On the Nordic stock exchanges, there was a decline in everyone except in Copenhagen.
The Stoxx 600 collective index, which brings together 600 of the largest companies in Europe, fell 0.95 percent on Monday.
Euro Stoxx 50 is another central, European collective index. It is designed to represent the 50 largest companies in the Eurozone.
On Monday, the index fell 1.2 percent.
With this day’s decline, both this index and the Dax index in Frankfurt have fallen by more than 20 percent, Bloomberg writes. One can then say that they have entered a «bear market», the opposite of «bull market».
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Oil price not back from the top
Oil prices have not fallen this afternoon from the top of the night until Monday. At the time of writing, North Sea oil (burnt spot) costs $ 122.8 a barrel, up around 4 percent for the day.
Oil and gas prices have soared since the war in Ukraine began, and another Monday. During the night, the oil price has reached levels that have not been set since the financial crisis in 2008.
During the morning, European gas prices reached record highs of over 300 euros per tonne. megawatt time. By comparison, the price was 75 euros in mid-February.
The development comes after US Secretary of State Antony Blinken confirmed Sunday in the country is in discussions about a possible trade ban on Russian oil with allies in Europe.
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Higher energy prices, less purchasing power
The increased oil and gas prices are one of two factors that particularly characterize the European markets now, according to chief analyst Thomas Eitzen in SEB.
– My most important points are that energy prices are ending higher now than they were on Friday, and there is an even greater fear that everything in Russia will be lost, he says to E24.
High energy prices will result in poorer purchasing power in Europe, which also contributes to weighing on economic growth in general, Eitzen points out. This has a negative effect on European stock markets, which are less exposed to oil and energy in Norway.
Concerns about not getting value out of Russia at all have also increased if the Russians respond to sanctions by being physical things that are in the country.
“It is shrinking closer and closer to expropriating things, that Putin is responding with the same coin,” says Eitzen.
He points specifically to the financial sector and banks. These often have equity of only five percent, and can be exposed if they or the customer has borrowed to be completely lost in Russia, the SEB analyst believes.
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– The world is unprepared
DNB Markets says that Russian oil accounts for a small part of US oil imports and consumption, since the country produces so much itself. Men:
Blinken said that he was in “very active discussions” with European partners about a coordinated embargo. If it happens, ie that European countries also stop buying Russian oil, it will have significantly more to say, since Europe accounts for a much larger share of Russia’s oil exports, the brokerage writes in a morning report.
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– The world is very unprepared for this shock, says head of marketing strategy, Robert Rennie, at Australian Westpac to Financial Times.
Rennie says it is unclear whether a possible US ban would just cover oil or all Russian energy imports. The latter will have a “catastrophic impact” on energy prices, according to the strategy, according to FT.