MOEX and European Stocks Plummet as Putin Recognizes Ukraine Separatists

The ongoing tensions between Russia and Ukraine have continued to send ripple effects across the global financial markets. As tensions stay flared up, Moscow’s economy is feeling its effects the most.

With fears mounting over a possible invasion of Ukraine, Russian stocks took a beating in yesterday‘s trade activities. The MOEX index—Russia’s main index—plunged as much as 14.2% after Moscow said it destroyed two Ukrainian military vehicles that crossed into its territory. According to Refinitive, the MOEX price slump sets it on track for its most significant single-day fall since the financial crisis in 2008.

Potential Ukraine Invasion Cause Markets to Dip in Russia and Europe

The MOEX index was not the only stock affected by the increasing tensions in Europe. Other Russian shares, including those in the oil and gas, food sector, and banking sectors, were all affected. The European Stock indexes were not spared from the uncertainties as they also waivered.

Russia’s largest oil company, Rosneft, saw a price slump of 20%, bringing its total value loss since the start of the year to 30%. Gazprom, the Moscow-owned gas company, fell nearly 16% before reversing some of its losses, bringing its 2022 plunge to 19%. Meanwhile, the stock of gas producer Novatek was down 12%. Not to be outdone, food company Magnit lost more than a tenth of its value, and bank VTB plunged about 19% following the sell-off of Russian assets.

Also, Russian government bond prices fell, driving rates to their highest point in the current crisis.

Furthermore, Russian government bond prices fell, driving yields to their highest point in the current crisis. The rates on Russia’s 2030 dollar bond rose to 5.14%, up from just over 2% at the start of the year. Yields in Ukraine have also increased, with the 2032 dollar bond yield up more than half a percentage point to 11.1%.

In a far more widespread effect, European stock indexes are also feeling the impact of the crisis. The Stoxx Europe 600 index initially fell by 1.9% before closing the session at 1.3% lower. Additionally, the FTSE All-World share index, which has recorded a loss in six of its last eight sessions, declined by 2.2% this month. On the other hand, Gold’s spot prices, up 5% since January ended, dropped by 0.1% to $1,896. Finally, Brent crude climbed 1.9% to $95.27 a barrel in an opposite move, as oil prices recently reached seven-year highs following the tussle.

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Crypto Market Takes a Hit Too

The ongoing situation in Europe has also heavily impacted the cryptocurrency market, especially after Moscow’s recent crypto moves. The kremlin announced a bill to regulate and tax digital assets after Russia’s President, Vladimir Putin, called for a consensus amidst looming sanctions.

According to market data providers Kaiko, the slight recovery seen since February stalled amidst the increasing tensions. Bitcoin, which saw the value of its daily option matched by Ethereum, fell below the $40,000 psychological level. Meanwhile, its closest competition, Ethereum, also nosedived below $2700, with both digital assets losing all their gains in the month.

While outperforming both the larger crypto market and metaverse-related equities, metaverse tokens lost traction despite spearheading February’s feeble crypto comeback. Their strong performance in the month comes on the heels of both Meta and Roblox stock performing poorly in the same period. Increased investments and new partnerships were the catalysts for solid performances in some metaverse tokens.

Investors have been more cautious about how to react to the flow of news regarding Russia’s intentions in Ukraine. Bad news would precipitate further sell-off in the market, while ease to the tensions would make investors more bullish. 

Do you think the global financial market will stabilize anytime soon? Let us know your thoughts in the comments below.