Ukraine fears building: Markets hold their breath after Monday wiped off £43bn of London shares
Billions were wiped off the stock exchange in London yesterday after global markets were thrown into turmoil in the second Monday collapse in less than a month.
Nearly £58bn had been removed from the value of London’s top 350 companies just a couple of hours after markets opened on Monday.
However, the companies clawed back some of their losses and the damage was reduced to just £43bn by the time markets closed.
It comes as tensions continue over Ukraine. Yesterday, Armed Forces Minister James Heappey suggested the risk of war is the highest it has been in Europe since the 1950s.
“I fear that we are closer than we’ve been on this continent for 70 years. There’s 130,000 Russian troops around the border of Ukraine,” he told BBC Radio 4’s Today.
The reaction in global markets was stark, and worse for those in continental Europe.
In London, the FTSE 100 was trading down as much as 2.3 per cent, pushed to its lowest point in two weeks. The biggest stock indexes in Germany and France fell back by as much as 3.8%, but also reduced their losses later in the day.
By far the biggest loser on the FTSE 100 was Evraz, which lost close to a third of its value after demerging its coal business.
It is one of the world’s biggest steel producers and a lot of the company’s assets are in Russia.
“The prospect of war is rarely good for stock markets, and so the new trading week has begun on a bad note across Europe and Asia as investors fear the alarm clock is about to sound on a physical battle between Russia and Ukraine,” said Danni Hewson, a financial analyst at investment platform AJ Bell.
Shares in oil major BP were down nearly 4 per cent because the business has a nearly 20 per cent stake in Russian energy giant Rosneft.
BP’s share price drop was particularly surprising as oil prices are around a seven-year high.
“With worries that inflation is already running far too hot, the possibility Russia troops could move across the border has led to another surge in the oil price to above 95 dollars (£70) a barrel, edging up towards 96 dollars, a level Brent crude has not been at since 2014,” said Susannah Streeter, an analyst at investment platform Hargreaves Lansdown.
“Energy markets are clearly on edge and if supplies are threatened there is a risk oil will shoot up even higher, adding to price pressures for companies.”