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European stock markets fall after the seizure of the largest European nuclear power plant by Russia | Economy

Image of the Madrid Stock Exchange.
Image of the Madrid Stock Exchange.Vega Alonso (EFE)

The war in Ukraine continues to take its toll on financial markets. After the black day on Thursday, in which the Ibex 35 dropped almost 4% – its biggest drop since the sixth wave of the pandemic – and the other European stock markets lost around 2%, the last session of the first week March seems full of uncertainty. The seizure by Russia of the Zaporizhia nuclear plant, the largest in Europe, after an attack this morning, has revived the nerves of investors, who are once again taking refuge in the safest assets for fear that the conflict in Ukraine from place to new nuclear accidents.

According to the State Emergency Service of Ukraine, there are no victims and firefighters have already managed to put out the flames in the complex. However, this morning, President Volodymyr Zelensky accused Moscow of “nuclear terrorism” and wanting to “repeat Chernobyl.” The reaction was not long in coming. The Spanish selective has woken up this Friday with a drop of 0.21% and has lost 8,000 points. After the opening, the falls have accelerated to more than 2%. Between Monday and Thursday, the Ibex accumulates a loss of 5.6%. The most penalized values ​​are tourism and banks: Amadeus and IAG fell by 6%, while Sabadell and Bankinter fell by 4%. In the rest of the Old Continent, the crashes are even stronger. Frankfurt, Paris and Milan recorded drops of 3%.

Wall Street futures are also in the red. Western markets follow in the footsteps of Asian indices, which closed sharply lower: the Hong Kong index and the Tokyo Nikkei fell by around 2%. The Moscow Stock Exchange has been closed for five days and the ruble still has not raised its head, after the rating agencies Moody’s and Fitch have classified the Russian debt as a junk bond. The dollar continues to strengthen against the euro, which depreciated 0.4% this Friday. Due to the flight of investors towards safe-haven securities, German debt is trading in negative and the Spanish risk premium stands at almost 100 basis points.

Russia’s invasion of its neighbor and its economic aftermath have been shaking stock market operators’ sentiment for more than a week. The costs of energy, metals and grain have skyrocketed in recent days and, although the sanctions do not yet directly affect Russian exports, they are suffering from a strong blockade. “Many investors are afraid to buy Russian raw materials for fear that the operation may not finally be carried out due to the many obstacles that Russia is facing, either due to the possible closure of ports, due to the cancellation of operations by large companies. of maritime transport or due to the refusal of other companies to travel near the conflict zone, due to the lack of war insurance”, said Patricia García Sánchez de la Barreda, an analyst at MacroYield.

Experts agree that the rise in commodity prices fuels fears of stagflation. Gas picks up 8% and oil, which this Thursday has moderated its rally After setting a record after another, it rises again 0.75% and exceeds 110 dollars a barrel. The refusal of the Organization of the Petroleum Exporting Countries (OPEC) and its external partners —including Russia itself— to inject more supply to try to alleviate the pressure has added gasoline to the fire. “Having oil at almost 120 dollars is a problem. This is an indicator of inflation for central banks”, warned Diego Morín, an analyst at IG.

In fact, investors also have their sights set on the next steps of the key monetary authorities to tighten their monetary policy and bring price increases under control. The president of the Federal Reserve, Jerome Powell, has confirmed that the institution is preparing to raise interest rates in March. Although, the first rally seems to be less aggressive than expected, since it will possibly be 25 basis points instead of 50, as investors believed.

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