European stocks join Asia sell-off as Russia-Ukraine tensions grow
European stock markets have started the week in the red as worries about a possible Russian attack on Ukraine dents sentiment and investors brace for the Fed’s meeting this week.
Markets are likely to be shaken by concerns that there could be an imminent military conflict between Ukraine and Russia.
The US State Department recommended on Sunday that all US citizens in Ukraine depart the country immediately, citing Russia’s extraordinary military buildup on the border.
“Our recommendation to US citizens currently in Ukraine is that they should consider departing now using commercial or privately available transportation options,” the State Department said.
On Saturday, the UK’s Foreign Office accused Moscow of seeking to oust Ukraine’s pro-Western government and replace it with a pro-Russian administration. The Kremlin, in response, accused the UK of spreading disinformation.
Read more: Bitcoin stealers: malware that raid crypto wallets
S&P 500 futures (ES=F) were up 0.49%, Dow futures (YM=F) rose 0.43%, and Nasdaq futures (NQ=F) were 0.56%% higher as trade began in Europe.
It comes as the S&P 500 suffered its biggest weekly loss since the COVID market crash of March 2020 and is less than 2% away from a correction.
Richard Hunter of interactive investor said: “The apparently worsening of relations between Russia and Ukraine has put investors on alert, as any possible attacks by Russia will have wider implications which other major powers will be unable to ignore. Whether this results in military action or strict sanctions remains to be seen, but in any event the developments are adding to general investor unease.
“This cocktail of concerns also swept through Asian markets and landed at the door of UK markets in early exchanges. In particular, a number of broker downgrades weighed on the housebuilders, with growth prospect concerns weighing on the miners and more US earnings focused stocks also under pressure.”
Markets are also looking out for cues on rate hikes from the US Federal Reserve policy meeting this week.
Read more: UK dividend income rises to £94bn in 2021
“The Federal Reserve meeting later this week is expected to confirm the fears which investors have been harbouring so far this year, namely that that apart from an acceleration of tapering, interest rate cards are also likely to pepper the remainder of 2022,” Hunter said.
“The current consensus is for an initial hike in March, followed by a further two or three rises which could take the rate to 1% by year end. While the moves are increasingly necessary given relatively rampant inflation, they also bring the likelihood of dampening earnings prospects.”
Asian markets finished mixed. The Nikkei 225 (^N225) gained 0.24% and the Shanghai Composite (000001.SS) rose 0.04%. The Hang Seng lost 1.31% (^HSI).
Meanwhile, Brent crude oil (BZ=F) also climbed past $88 a barrel and the US crude (CL=F) rose 0.54% to $85.60 per barrel on Monday.