Ukraine concerns hit world equities
london — There was no let-up for bruised share markets on Monday as growing fears of a military conflict in Ukraine followed last week’s heavy sell-off on Wall Street, Tokyo and major European exchanges.
Towns in eastern Ukraine faced the threat of military action from government forces after Kiev gave pro-Russian separatists a 9 am (0600 GMT) deadline to disarm and end their occupation of state buildings or face a major “antiterrorist” operation.
As the deadline passed, a Reuters reporter in the flashpoint city of Slaviansk, where armed men had seized two government buildings, said there was no outward sign the rebels were complying with the ultimatum.
For financial markets it was yet more uncertainty. Asian markets had continued to concede ground overnight and Europe followed suit with the pan-regional FTSEurofirst 300 down 0.5 per cent in morning trading.
A flurry of M&A activity, including a $6 billion copper mine sale from Glencore Xstrata, helped cushion the falls, which were driven by a 0.7 per cent decline in the Dax. German-listed firms have some of the biggest links to Russia. Russian markets tumbled. The rouble and Moscow’s main stock market were down around 1 and 1.5 per cent, while the country’s key bonds stayed under pressure as the cost of insurance against default increased.
European Union foreign ministers will hold talks later on Monday about tougher sanctions against Russia. The worry for many is that the two sides end up imposing increasingly tough measures that will inevitably harms both.
The low-yielding yen benefited from the heightened risk aversion. The dollar was nudged down to 101.66 yen, after touching a 3-1/2-week low of 101.32 yen on Friday, far from the 2-1/2-month high of 104.13 yen set on April 4.
The euro retreated to $1.3825 after tough talk from the European Central Bank over the weekend that it will take action to head off further gains in the currency.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan had shed 0.5 per cent, pulling further away from five-month highs hit on Thursday. Japan’s Nikkei stock average ended down 0.4 per cent at a fresh six-month closing low.
Among commodities, spot gold benefited from the move towards safe-haven assets, adding about 0.6 per cent to $1,327.10 an ounce, after earlier marking a new threeweek high. US crude for May delivery added 0.6 per cent to $104.42 per barrel and Brent crude rose 0.8 per cent to $108.21, bolstered by fears that the Ukraine situation could escalate. Ukraine is a major supply route for Russian gas to Europe.