By Barbara Kollmeyer
Investors dumped European stocks and the euro currency on Friday, as anxiety ramped up over an intensifying war in Ukraine. Bank of America said the most money ever flowed out the region over the last week.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +1.65% closed down 3.6% and lost 7% for the week, the biggest since March 2020 when the coronavirus pandemic began, in the wake of Russia’s invasion of Ukraine.
The German DAX /zigman2/quotes/210597999/delayed DX:DAX +1.49% closed down 4.41% and French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.66% was down 4.97%, while the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +1.81% closed down 3.48%.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.7014% was under pressure, down 1.3% to $1.0914, a level not seen since May 2020, as investors flocked to the U.S. dollar /zigman2/quotes/210598269/delayed DXY +0.41% , gold /zigman2/quotes/210034565/delayed GC00 -0.12% and government bonds. The yield on the 10-year bund /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y -0.38% fell 6 basis points to negative 0.06%.
Already nervous investors woke to news Friday of a fire at Europe’s biggest nuclear plant in Ukraine, as fighting raged for a ninth day.
According to Associated Press reports , the nuclear power plant in the southern Ukrainian city of Enerhodar had been shelled by Russian troops, sparking a fire at the facility. The plant reportedly has six reactors, and three had been offline before the attack.
Ukrainian state emergency services later said on Facebook that the fire, at a training building, had been contained, while the regional military service said early measurements showed radiation was “unchanged” and posed no danger to the population. The power plant is now being controlled by Russian troops.
“The incident raised concerns that the conflict could become even more dangerous, even after both sides have agreed to set up humanitarian corridors,” said Charalambos Pissouros, head of research at JFD, in a note to clients.
“We stick to our guns and we repeat for the umpteenth time that it is too early to assume that the worst is over. Even following the aforementioned agreement, Russian forces continued surrounding and bombarding Ukrainian cities, with the conflict entering its second week,” said Pissouros.
“Thus, we still believe that the path of least resistance for equities, the euro, and the pound, is to the downside,” with commodities and safe havens such as the yen and franc staying supported, he said.
Bank of America said Friday that $6.7 billion flowed out of Europe over the last week, the most on record. Any March de-escalation of the Russia-Ukraine conflict will likely cause a “big bear rally in risk assets but we say sell-the-rip as Fed/ECB is now hopelessly trapped between Wall St deflation & Main St inflation,” said strategists.
Nearly every stock sector in Europe was under pressure, with banks leading the way south. HSBC /zigman2/quotes/208272822/composite HSBC -3.27% /zigman2/quotes/203901799/delayed UK:HSBA -0.65% shares slid 6% and Deutsche Bank /zigman2/quotes/203042512/composite DB -3.31% /zigman2/quotes/207242873/delayed XE:DBK -0.32% shares tumbled 10%. Heavily weighted energy names such as Shell /zigman2/quotes/206428183/delayed UK:SHEL +1.46% /zigman2/quotes/205095589/composite SHEL -6.36% , TotalEnergies /zigman2/quotes/206172043/delayed FR:TTE -0.93% /zigman2/quotes/201824152/composite TTE -3.18% and BP /zigman2/quotes/207305210/composite BP -4.00% /zigman2/quotes/202286639/delayed UK:BP +2.60% remained elevated Friday.
Airlines and auto makers were also hard hit, with Deutsche Lufthansa /zigman2/quotes/201210530/delayed XE:LHA +0.27% down 5% and Wizz Air /zigman2/quotes/210449062/delayed UK:WIZZ +0.35% off 7% each and Volkswagen /zigman2/quotes/203434344/delayed XE:VOW3 +1.23% down 6%.
Russia’s stock market was shut for a fifth day on Friday and will remain closed at least through March 8, the central bank announced.
The country has been hammered by sanctions as punishment for its invasion of Ukraine. The London Stock Exchange on Friday announced the suspension of more Russian companies with secondary listings.