European Stocks Lower; Ukraine Talks, ECB Meeting Looms Large

  • Investing.com
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European Stocks Lower; Ukraine Talks, ECB Meeting Looms Large

By Peter Nurse

Investing.com - European stock markets weakened Thursday, handing back some of the previous session’s hefty gains ahead of new high-level Russia-Ukraine talks and the latest policy-setting European Central Bank meeting.

By 3:50 AM ET (0850 GMT), the DAX in Germany traded 1.9% lower, the CAC 40 in France dropped 1.8%, while the U.K.’s FTSE 100 fell 1%.

European equities posted strong gains on Wednesday, with the DAX and the CAC 40 both closing over 7% higher after crude prices suffered their biggest one-day drop in almost two years amid indications that major producers could increase supply to make up for the disruptions caused by the Western sanctions on Russia.

Markets have been roiled over the last couple of weeks by Russia’s invasion of Ukraine, with commodity prices, and oil, in particular, soaring to record levels, raising stagflation fears.

By 3:50 AM ET, U.S. crude futures traded 3.3% higher at $112.24 a barrel, bouncing from a fall of more than 12% on Wednesday, its worst day since late November. The Brent contract rose 4.7% to $116.34, after dropping 13%, the largest one-day drop since April 2020.

Investors are now focusing on the meeting later Thursday in Turkey between Russia's foreign minister Sergei Lavrov and his Ukrainian counterpart Dmytro Kuleba, the first meeting between the two since Russia’s invasion.

These talks are taking place amid mounting fury in the West, and the potential for further sanctions, over Ukraine's accusation of Russia bombing a children’s hospital in the city of Mariupol.

Investors will also be watching the latest policy-setting meeting from the European Central Bank later Thursday, with the policymakers having to walk the tightrope caused by surging energy prices likely exacerbating already record-high inflation as well as slowing growth.

The central bank had been expected to announce the end to its emergency bond purchases, opening the way for an interest rate hike late this year. However, the high uncertainty caused by the Ukraine conflict is likely to stay in the hands of policymakers this month.

In corporate news, Rio Tinto (NYSE: RIO ) stock slumped 6% after the company became the first major mining company to cut ties with Russian businesses.

Hugo Boss (DE: BOSSn ) stock fell 2.5% after the German fashion house warned that it was difficult to assess the impact of the Ukraine war on growth in the sector, noting that Russia and Ukraine accounted for around 3% of group sales in 2021. That said, it still expected a healthy increase in sales and profits this year.

Credit Suisse (SIX: CSGN ) stock fell 1.7% after the Swiss lender flagged just under $1 billion of net credit exposure to Russia. 

Additionally, gold futures fell 0.2% to $1,992.00/oz, while EUR/USD traded 0.3% lower at 1.1038.

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