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(Reuters) -European shares slipped to their lowest level in 20 days on Monday, with travel, banking and auto stocks leading the slump as investors fretted over geopolitical risks following warnings that Russia could invade Ukraine at any time.
The Europe-wide STOXX 600 index fell 2.7% – hitting its lowest since Jan. 24. All the major sub-sectors were in the red, with travel & leisure, banking and automakers losing over 3%.
The energy sector declined 1.3%, falling the least, as oil prices hit their highest in more than seven years on worries of disruption in exports from Russia, one of the world’s top oil producers. [O/R]
Global investors dumped riskier assets and moved to safe-havens such as gold and government bonds after a warning from the United States that Russia could invade Ukraine at any time and might create a surprise pretext for an attack.
“When it comes to the Russian issue, it is very difficult to say whether the markets are overreacting or not,” said Matt Siddle, portfolio manager at Fidelity Investments.
“You’ve two big uncertainties. It’s not entirely clear what the Fed policy is. It’s a tightening policy, but it’s not clear how far and quick they’re going to go, and there’s also geopolitical uncertainty with Russia.”
A gauge of volatility in European equities spiked to 33.95 points – its highest since Jan. 24 when global markets sold off on concerns over higher interest rates and valuations in the technology sector.
Some of the Russian-exposed European banks including Raiffeisen Bank International, Unicredit (MI:CRDI) and Societe Generale (OTC:SCGLY) fell between 5% and 8.3%.
Airlines were also hit hard, with shares of WizzAir, British Airways-owner IAG (LON:ICAG), Germany’s Lufthansa and Air France KLM (OTC:AFLYY) down between 5.3% and 8.1%.
Dutch airline KLM, part of Air France, said on Saturday it will stop flying to Ukraine, while Lufthansa was considering suspending air traffic in Ukraine.
The STOXX 600 has fallen 6.5% so far this year, while New York’s S&P 500 is down 7.3% as fears around quicker U.S. rate hikes and geopolitical concerns knocked investor confidence. Both the indexes started the new year at record highs.
Among other stocks, Clariant slumped 17.4% to the bottom of STOXX 600, as the Swiss speciality chemicals group delayed the release of its 2021 results due to an investigation into accounting issues.
Commerzbank (DE:CBKG) fell 5.2% after Germany’s finance minister said the government would not keep its stake in the lender in the long run.
