Chaos on international markets as worries build over Russia tensions
A bruising day on global markets pushed the FTSE 100 to its lowest point in a month – though the index avoided some of the malaise of its European peers.
The index closed down 2.6% after initially looking like it might avoid a drubbing on Monday morning.
The 196.98-point drop took the index to 7,297.15, its lowest point since December 20.
The escalating drumbeat of conflict risk in Ukraine has seen European equity markets fall back sharply
Michael Hewson, CMC Markets analyst
The index opened only slightly in the red but continued to steadily push downwards over the day as investors worry about a potential conflict in eastern Europe.
On Monday morning, military alliance Nato said it will send more ships and fighter jets to eastern Europe as a “deterrence and defence as Russia continues its military build-up in and around Ukraine.”
Markets were spooked by the potential of further conflict in the region, which could bring dire economic consequences on top of the loss of human life.
“The escalating drumbeat of conflict risk in Ukraine has seen European equity markets fall back sharply today, as the UK followed the US in announcing that it was removing nonessential embassy staff from Kyiv as concerns increased that a conflict was getting closer,” said CMC Markets analyst Michael Hewson.
“Reports during the day that NATO is putting additional ships and aircraft on standby, and that the US is considering sending troops to shore up its Baltic defences, has also upped the ante, after requests from the likes of Estonia for a greater US presence to deter a potential Russian escalation.
“These concerns are outweighing and overshadowing this week’s Federal Reserve rate meeting, and while we can expect to see the US central bank confirm that a March rate rise remains on the cards, anything more than that is likely to be a big ask, given events currently playing out in Europe.”
Frankfurt’s Dax index dropped by 3.5%, while the Cac 40 in Paris fell 3.7%.
In Sweden, which is re-deploying troops to the Baltic island of Gotland, the main index dropped by its fastest rate in 19 months and the Helsinki index in Finland dropped 4.3% while the OMX Tallinn in Estonia dipped 4.7%.
In Moscow the RTS Index was down 8.1%.
New York’s S&P 500 had dropped 3.1% by the time markets closed in Europe, while the Dow Jones was down 2.5%.
In currency news, sterling dropped against the euro and dollar. By the end of the day £1 would buy 1.3449 euros or 1.1889 dollars.
Shares jumped 7.3% after reports that an activist investor is building up a stake in the consumer goods firm.
Nelson Peltz reportedly plans to take a hands-on approach at the company. He is partly credited for strong recent performances at Procter & Gamble, where he was chairman until last year.
On the other end of the spectrum, banknote maker De La Rue issued a profit warning on Monday morning. By the end of the day its shares had lost more than 22% of their value.
The biggest fallers on the FTSE 100 were Pearson, down 60p at 599p; Barratt, down 60p at 614.4p; Scottish Mortgage Investment Trust, down 95p at 1,014.5p; Evraz, down 44.1p at 496.5p; and Polymetal, down 88.5p at 1,132p.