Closing summary
It’s been a grim week for global stock markets while oil, gas and other commodity prices have continued to surge, from metals to crops.
Britain’s FTSE 100 index suffered its worst week since March 2020, falling 6.7%. Europe’s Euro Stoxx 600 index ended the week 7% lower, which was also the worst week since the coronavirus pandemic started. Germany’s Dax suffered a 10% weekly loss.
The FTSE in London finished 251 points lower on Friday at 6,998, a 3.5% drop after the war in Ukraine escalated with a Russian attack on Europe’s biggest nuclear power station, Zaporizhzhia, which was then seized by Putin’s forces. The German and French stock markets fell more than 4%, taking the Dax in Frankfurt to its lowest levels since late 2020, while the Italian index tumbled 6.2% to its lowest level in more than a year.
As stock markets slid, investors piled into investments regarded as safer – gold, currencies like the dollar and yen, and government bonds. British 10-year government bonds recorded their biggest weekly rise in more than a decade. As gilts were in demand, this pushed their yields, or returns to investors, down the most since November 2011 (when bond prices go up, yields go down).
The Moscow stock exchange stayed closed all week, while the rouble fell to record lows amid wider sanctions on Russia. It hit an all-time low of 118.35 per dollar in Moscow on Thursday, and ended the week at 105 per dollar.
Sterling lost 1% against the dollar to $1,3210. War in Ukraine has boosted demand for safe-haven investments like the dollar and gold. Spot gold rose 1.5% to $1,965 an ounce.
The euro slipped below the $1.10 level for the first time since May 2020, down 1.4%, after the Russian attack on the Ukrainian power station, Europe’s biggest. The single currency has also been hurt by growing risks to the European economy and the expectation the US Federal Reserve will hike interest rates much faster than the European Central Bank.
Fears of supply disruptions have sent commodity prices soaring. Aluminium has been hitting fresh record highs most days. Three-month aluminium on the London Metal Exchange touched a new all-time high of $3,850 on Friday and was on track for its biggest weekly gain ever, rising 13% so far. Nickel prices rose more than 13% over the week, the biggest weekly rise in August 2019.
Wheat traded in Chicago, the global benchmark, has soared more than 50% since Russia invaded Ukraine over a week ago. Prices rose as high as $13.40 a bushel on Friday.
Michael Hewson, chief market analyst at CMC Markets UK, said:
The global inflation shock has gained momentum this week with wheat prices rising to a 14-year high, corn prices to an 8-year high, and Brent crude prices hitting 10-year highs of $120 a barrel.
The rise in agricultural commodity prices is particularly worrying given that the last time they were at these sorts of levels, we had the Arab Spring in 2012.
Wholesale natural gas prices hit record highs. The UK National Balancing Point (NBP) benchmark soared above 500p a therm at one point, smashing through the previous all-time high set in December amid a prolonged surge that caused the collapse of a series of household gas suppliers.
The Dutch Title Transfer Facility (TTF) for delivery in April, a common benchmark for European gas, hit €200 for the first time, before settling back later in the day.
Global food prices hit a record high in February, jumping 24% year-on-year, according to the UN food agency – even before the Russian invasion of Ukraine.
Here’s a selection of today’s top stories:
Thank you for reading this week. My colleague Graeme Wearden will be back next week. Bye! – JK
Updated
Here is our latest list of western sanctions against Russian oligarchs.
