By Steve Goldstein
European stocks careened lower on Monday on the threat of further sanctions against commodities production giant Russia over its invasion of Ukraine, news that sent German equities into a bear market.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.91% slumped 2.2% as commodity prices skyrocketed in response to U.S. Secretary of State Anthony Blinken saying there were active talks about banning Russian oil imports.
Of the major regional indexes, the German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.79% declined 3%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -1.14% declined 2.5% and the U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.56% dropped 1.4%. The German index is now down 22% from its highs of November, meeting the technical definition of a bear market of more than 20% below its peak. The CAC 40 may also fall into a bear market, depending on the close.
Futures on the Dow Jones Industrial Average /zigman2/quotes/210407078/delayed YM00 -0.27% fell 495 points.
Commodities, which saw the biggest spike in 50 years last week, kept surging, as Brent crude oil futures leapt to $125 per barrel, and wheat /zigman2/quotes/210389638/delayed W00 -0.38% futures spiked by 7%.
“While the Russian aggression in Ukraine continues the risk of a further escalation keeps investors unsettled,” said Thomas Hempell, head of macro and market research at Generali Investments. “Price pressures are compounded by mounting risk of supply chain disruptions as Russian firms are cut off financially and cargo traffic is curtailed.”
Russia announced a limited cease-fire while continue to shell cities including Mykolaiv, which is about 300 miles south of Ukraine’s capital Kyiv. A new round of talks between Russia and Ukraine is due to start in the afternoon.
Banks including Commerzbank /zigman2/quotes/207286669/delayed XE:CBK -0.24% , auto stocks including parts maker Faurecia and travel stocks including package holidays company TUI /zigman2/quotes/207049334/delayed UK:TUI -1.16% led the decline, while metals producers including Anglo American /zigman2/quotes/201381512/delayed UK:AAL -1.18% and oil producers including Shell /zigman2/quotes/206428183/delayed UK:SHEL -0.73% advanced.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.0281% dropped to $1.0831 from $1.0935.