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European stocks are at risk if Russia invades Ukraine

  • Posted Feb 21, 2022 14:32 by Anthony Ellis
  • 2152
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INTERNATIONAL: Russia-exposed European stocks have been under pressure for weeks amid fears Russia could invade Ukraine and the stand-off has triggered volatility across the European stock market.

After Russian-backed separatists in breakaway regions in eastern Ukraine announced an evacuation of residents on Friday, Germany's main stock index, the most sensitive to a potential conflict in Ukraine, fell more than 1% and headed towards a four-month low hit earlier this week.

The United States has said Russia could invade Ukraine at any time and might create a surprise pretext for an attack and reaffirmed a pledge to defend "every inch" of NATO territory.

Investors are monitoring shares most at risk from potential sanctions against Russia, including banks, oil, mining, consumer and construction material, companies with exposure to Russia and Ukraine.

Citi analysts said their basket of European companies with Russian exposure has underperformed during periods of heightened tensions, as in 2014 and 2018, following Western sanctions against Russia.

The White House said in a statement that Biden had accepted the meeting "in principle" but only "if an invasion hasn't happened."

The euro climbed 0.35% higher to $1.1362 after it lost some ground in early trade. The risk-friendly Australian dollar gained 0.55%.

The yen in contrast gave up most of its early gains to trade at 114.97 yen per dollar. Like the Swiss franc, the safe-haven Japanese currency has benefited from the tensions spurred by Russia's military build-up on Ukraine's borders.

Sterling gained 0.19% to $1.3623 ahead of the release of PMI data which will give an indication of the impact of the Omicron strain of COVID-19 on the British economy.

The dollar index, which measures the greenback against six peers, fell 0.28%.

Currency markets participants are also focused on central bank policy, seeking clues on the speed and size of interest rate hikes in major markets.

Markets will be closely watching remarks from U.S. Federal Reserve policymakers this week for any hint that an expected rate hike at the Fed's March meeting could veer more towards 50 basis points instead of the current consensus for a 25-basis point increase.

Bitcoin BTC=BTSP> recovered a little from a mild bruising over the weekend. The world's largest cryptocurrency was up 2.3% at around $39,000.

Early on Monday, it touched a two-week low of $38,210.


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