What was supposed to be a calm day in the markets quickly turned into a volatile session with the European stock markets fall by more than 1% shortly before noon. The news coming out of Russia regarding the war in Ukraine is not good and has brought uncertainty back to the world stage.
After a stable open, stocks fall after the president of Russia, Vladimir Putinratified this Tuesday a decree modifying Moscow’s nuclear doctrinewhich broadens the type and origin of threats to which it could respond with this type of weaponry. A decision that comes days after the United States granted Ukraine limited authorization for long-range missile attacks on Russian territory.
The new Russian nuclear doctrine also envisages that this type of weaponry could be used not only in the event of a nuclear threat against Moscow, but also against non-nuclear hypersonic weapons, drones and ballistic and cruise missiles which pose a threat to Russia. Russian territory. thus broadening the criteria considered so far.
Fear of an escalation in the stagnant war in Ukraine which give rise to the use of nuclear weapons immediately activated the mode risk aversion (risk outside) on the markets. Within European equities, the EuroStoxx 50the benchmark index in Europe fell 1.25% to 4,730 points. In Spain, the Ibex 35 You leave over 1.3% and play the full 11,500.
On the contrary, safe haven assets such as US Treasury Bonds (yields fall). The yield on the 10-year Treasury bond, the benchmark note in the United States, fell to 4.35% after returning to the level of 4.5% in recent days. He yentraditional safe haven currency, appreciated up to 0.8% against the dollar, while the Swiss franc reached its highest level against the euro since August. Within European fixed income securities, the performance of pack German The 10-year bond fell as much as 10 basis points, to 2.27%, its lowest level since late October.
“All this andYes purely geopolitical“, confirms Neil Jones, managing director of TJM Europe. “The market is getting carried away by the headlines linked to Putin and this has caused an avalanche of sell signals”, he certifies. “It is clear that all this is not good,” analyzes Andrea Tueni, head of commercial negotiations at Saxo Banque France. “The situation can get worse before improving in the coming weeks, so this is something investors should keep in mind.
Meanwhile, concerns about possible duty and other policies that Donald Trump could impose during his second term in the White House continue to put pressure on European stocks, which have recorded four consecutive weeks of decline. He strengthening of the dollarTHE China’s economic slowdown and the region’s anemic economy are also exerting increasing pressures.
Some analysts are trying to reassure investors. “We believe geopolitical tensions will be short-lived for now,” says Joachim Klement, director of strategy, economics and ESG at Panmure Liberum. “Investors should not attach too much importance to change in the Kremlin’s nuclear policy. “Tensions between Russia and the West continue, as Putin has no incentive to escalate the situation until Trump takes office.”
