European stocks fell on Friday, while US futures were subdued, after Moscow-backed separatists in eastern Ukraine announced plans for a “mass evacuation” of civilians to Russia.
The Stoxx Europe 600 share index lost 0.5 per cent, having opened the session higher. London’s FTSE 100 dipped 0.1 per cent and Germany’s Xetra Dax fell 0.7 per cent.
Futures markets implied that Wall Street’s S&P 500, which closed more than 2 per cent lower on Thursday, would lose 0.1 per cent in early New York dealings. Contracts tracking the top 100 stocks on the technology-focused Nasdaq Composite, which is sensitive to swings in market sentiment because of high valuations, were flat.
Brent crude, the oil benchmark, fell 1.9 per cent to $91.16 a barrel after touching a seven-year high this week.
Financial markets have swung sharply over the past week as developments in Ukraine added to fears of potential sanctions against Russia that could exacerbate inflation and prompt western central banks to tighten monetary policy. Russia is one of the world’s largest oil producers and a leading commodities exporter.
“The market has been pricing in the economic implications if sanctions were implemented on Russia,” said Lale Akoner, senior market strategist at BNY Mellon Investment Management.
If an invasion did not occur, she added, “then oil prices fall, commodities prices and precious metals go down and equities will go higher as risk sentiment improves”.
On Friday, Moscow-backed separatists in eastern Ukraine cited increased shelling on the front lines as they outlined plans for evacuation, adding to beliefs that Russia is planning an invasion.
President Joe Biden, speaking at the White House on Thursday, had said there was a “very high risk” of a Russian invasion and that the US believed Moscow was engaged in “a false flag operation to have an excuse to go in”.
Antony Blinken, US secretary of state, said late on Thursday that he had invited his Russian counterpart Sergei Lavrov to meet in Europe next week to prepare a possible summit of “key leaders”. A state department spokesperson said Russia had responded with possible dates “late next week” for a meeting with Blinken, but he cautioned that this was contingent on Russia not invading Ukraine.
Russia’s Moex share index fell 2.3 per cent on Friday, following a 3.7 per cent loss in the prior session. The rouble moved 0.3 per cent higher against the dollar, having trimmed earlier gains.
In Asia, Hong Kong’s Hang Seng index dropped 1.9 per cent as Chinese technology stocks fell sharply. The moves came after the National Development and Reform Commission, Beijing’s top state planning agency, urged online food delivery platforms to lower the fees they charge restaurants.
Shares in food platform Meituan dropped almost 15 per cent. Hong Kong shares of internet holding company Alibaba, which owns food delivery platform Ele.me, fell 2.9 per cent.
In government bond markets, the yield on the benchmark 10-year US Treasury note, which moves inversely to its price and underpins borrowing costs worldwide, fell 0.03 percentage points to 1.95 per cent.
Germany’s equivalent Bund yield dipped 0.02 percentage points to 0.21 per cent.
