Oil price rises above $100, global stock markets plunge as Russia invades Ukraine – business live | Business

An index of European banking stocks fell more than 4% this morning, steeper than a 3% fall in the wider Euro Stoxx index.

Banks with big operations in Russia took a hammering, including Austria’s Raiffeisen Bank International, down almost 12%, while Italy’s UniCredit fell 6.5% and France’s Société Générale lost 5.3%.

European banks are most exposed to Russia, especially those in France, Italy and Spain, which far outstrip UK bank exposure, Reuters said, citing data from the Bank for International Settlements.

Deutsche Bank and the Munich-based insurer Allianz, two of Europe’s most important financial firms and both with operations in Russia, said they were ready to comply with sanctions.

Allianz, Europe’s biggest insurer, said the share of Russian government bonds in its portfolio was “currently very low” and it had recently implemented a freeze on those securities. Deutsche Bank, Germany’s largest lender, has reduced its presence in Russia in recent years, along with other banks.

The Lloyds boss Charlie Nunn told reporters on a results call this morning that the UK bank was on “heightened alert” for cyber attacks from Russia, which he said were discussed in a meeting between the government and banking bosses about Russia yesterday.

Some 31 Russian companies are traded on the London stock exchange. State-owned banks Sberbank and VTB, along with state-backed oil and gas producers Gazprom and Rosneft have secondary listings here (and their primary listing in Moscow).

The shares have tanked this morninng: Sberbank has lost 75% and VTB fell almost 22%. Gazprom is down 36%, Rosneft has dropped 23% and Lukoil has tumbled nearly 44%.

The Anglo-Russian minder Polymetal is the top faller on the FTSE 100 now, down 42%, with the Russian mining group Evraz in second place, down nearly 30%.

Gas and oil prices are surging. The British day ahead gas contract has jumped 38% to £225 per mega watt hour.

Brent crude is 6.6% higher at $103.21 a barrel, the highest since August 2014, while US light crude has jumped 6.2%% to $97.75 a barrel.

Oil prices have surged more than $20 a barrel since the start of 2022 as the Ukraine crisis rumbled on, with fears that the US and Europe would impose sanctions on Russia’s energy sector, thereby disrupting supplies.

Russia is the world’s second-largest oil producer and sells most of its crude to European refineries. It is also the largest supplier of natural gas to Europe, providing about 35% of its supply.

Warren Patterson, head of ING’s commodity research, told Reuters:

Russia’s announcement of a special military operation into Ukraine has pushed Brent [above] the $100 per barrel mark.

This growing uncertainty during a time when the oil market is already tight does leave it vulnerable, and so prices are likely to remain volatile and elevated.

There are only three risers on the FTSE 100 in London at the moment, as the blue-chip index slid 197 points, or 2.63%, to 7,300. The top faller is, once again, the Russian miner Evraz, down 30%, which has suffered heavy losses this week.

Lloyds Banking Group is also among the biggest fallers, down nearly 8%, despite a five-fold increase in profits. Banking shares are falling across Europe as the Ukraine conflict took a turn for the worse, with full-scale invasion by Russia.

Lloyds said it was on “heightened alert” for cyberattacks from Russia. German insurer Allianz said it had frozen its Russian government bond exposure, while Deutsche Bank said it had contingency plans in place.

European gas prices have jumped more than 40% after the Russian invasion of Ukraine. Benchmark Dutch gas futures gained as much as 41% to €125 per megawatt hour, the highest level since just before Christmas, according to Bloomberg. They later traded 19% higher at €106.11.

German power for March delivery soared as much as 31%, reaching €260 per megawatt hour.

For now, there does not appear to be any disruption of oil and gas flows through Ukraine.

Aluminium prices in London have hit a record high after Moscow’s invasion of Ukraine, as investors worry about supplies from Russia, a major metals producer, and an impact on production from higher energy prices. Russia produces 6% of the world’s aluminium, and 7% of its mined nickel.

Three-month aluminium on the London Metal Exchange jumped to an all-time high of $3,443 a tonne, and later traded 4.2% higher at $3,428.5. Nickel climbed 3.4% to $25,220 a tonne, after hitting its highest level since May 2011 t $25,240.

Soni Kumari, an analyst at Melbourne-based ANZ bank, told Reuters:

Aluminium and nickel are energy intensive metals and higher energy prices would further push the cost curve. This raises risk of more European smelters suspending their production or postponing their restart plans.

Germany pulled the plug on a major gas project, the $11bn Nord Stream 2 pipeline owned by the Russian state-owned gas giant Gazprom on Tuesday, further boosting natural gas prices.

European shares have tumbled at the opening bell. Germany’s Dax fell 4.4%, while the French market dropped nearly 4%, Spain’s Ibex slid 4.3% and the Italian exchange lost 2%. The FTSE 100 in London has fallen nearly 200 points, or 2.6%.

The Russian central bank said it would intervene in currency markets to prop up the rouble, after it crashed to an all-time low of 89.60 against the dollar. Against the euro, it is trading at $98, down nearly 7%.

Russian forces have fired missiles at several cities in Ukraine and landed troops on its coast today, after denying for weeks that they had plans for an invasion.

Russia’s currency and bonds have tanked, prompting the Bank of Russia to announce its first foreign exchange intervention to shore up financial stability since 2014, the year when Russia annexed Crimea from Ukraine.

The bank said:

To stabilise the situation on the financial market, the Bank of Russia decided to start interventions on the currency market.

The bank has also decided to expand the list of securities it accepts as collateral in exchange for liquidity it provides, and will hold operations to offer extra liquidity to the Russian banking sector.

Markets are also bracing for tougher western sanctions against Russia, following measures criticised as soft on Tuesday and Wednesday.

As investors pile into safe-haven assets, the yields on eurozone government bonds have fallen sharply (the return to an investor from the bond’s coupon, interest, payments).

Investors are buying German 10-year bonds, the benchmark in Europe, pushing the yield down to 1.139%, the lowest in three weeks. Most other 10-year bond yields in Europe are also down.

Michael Hewson, chief market analyst at CMC Markets UK, said:

It’s probably not hyperbole to say that Europe is now at its most dangerous juncture since World War 2.

Gold, a traditional safe haven investment seen as a good hedge against rising inflation, jumped as much as 2% to their highest levels in a year, touching $1,948.77 an ounce. They later traded at 1.8% to $1,941 an ounce, while silver prices rose 2.3% to $25.08 an ounce.

Palladium prices also surged. Russia is the world’s third-largest producer of gold and Moscow-based Norilsk Nickel is a major producer of palladium and platinum. Spot palladium rose 2.7% to $4,549.01 an ounce, and platinum gained 1.2% to $1,104.50.

The UK also also threatened “unprecedented” sanctions against Russia.

UK junior minister James Cleverly told Sky News:

We will be bringing forward …. in close concert with our international friends and allies, an unprecedented sanctions response, coordinated sanctions response, to punish this appalling decision.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Oil prices have broken through $100 a barrel and global stocks are plunging, after Russian forces invaded Ukraine.

Vladimir Putin ordered a “special military operation” at dawn, amid warnings from world leaders that it could spark the biggest war in Europe since 1945. Within minutes of Putin’s short televised address, at about 5am Ukrainian time, explosions were heard near major Ukrainian cities, including the capital Kyiv.

The United States and its allies will impose “severe sanctions” on Russia, US president Joe Biden said.

Oil prices jumped more than 6% and Brent crude went through $100 a barrel for the first time since mid-2004. It touched $103.32 a barrel, the highest since August 2014, while US light crude soared to $97.51 a barrel, up $5.4.

The rouble hit a record low of 89.60 against the dollar, and the Moscow stock exchange remains temporarily suspended, but is due to reopen at 10am GMT. Russian sovereign dollar bonds are selling off, with the bond maturing in 2029 down more than 15 cents to a record low of 72.5 cents.

Asian stocks tumbled, with Japan’s Nikkei losing 1.8% and Hong Kong’s Hang Seng and the Singaporean exchange falling more than 3%.

European stock futures point to sharp losses when bourses over here open at 8am GMT. Euro Stoxx 50 futures are down 4.7%, German Dax futures are more than 5% lower and FTSE futures have fallen 3%.

The Agenda

• 7.45am GMT: France consumer confidence
• 11am GMT: CBI retail sales survey
• 1.15pm GMT: Bank of England governor Andrew Bailey speaks
• 1.30pm GMT: US GDP for fourth quarter, second estimate (forecast: 7%)
• 1.30pm GMT: US Initial jobless claims for week of 19 February