European stocks fall as impact of Ukraine war spreads

The impact of the Ukraine crisis stretches to European stock markets on Tuesday, with the IMF reducing its global growth estimates.

After opening, Wall Street was up, with the three major indices rising roughly 0.8 percent, a significant turnaround from Monday when markets were lower due to concerns about higher interest rates.

In Europe, trade resumed Tuesday afternoon after an extended Easter holiday, with London’s benchmark FTSE 100 index flat, the Paris CAC 40 down 0.7 percent, and Frankfurt’s DAX index down 0.1 percent.

In its newest outlook report on Tuesday, the International Monetary Fund drastically lowered its global growth forecast for 2022 to 3.6 percent, 0.8 points lower than its prior estimate in January.

Energy prices are surging, debt levels are rising and shortages remain acute, the IMF noted, as multiple crises including the Ukraine war and coronavirus pandemic fuel an acceleration of inflation.

“The economic effects of the war are spreading far and wide — like seismic waves that emanate from the epicenter of an earthquake,” IMF chief economist Pierre-Olivier Gourinchas said in the report.

The eurozone’s economy was downgraded even more, with growth now expected to be 2.8 percent rather than 3.9 percent.

In a letter, experts at Charles Schwab investment firm said Asian markets differed as the region considered the implications of Covid lockdowns in China.

Official figures indicated China’s economic growth accelerated to 4.8 percent in the first quarter of this year, but the government warned of “severe challenges” ahead.

With investor sentiment “extremely negative”, Patrick O’Hare of Briefing.com wrote, there is “some speculation that a contrarian rally effort could soon come to fruition”.

He also noted there was a “lacklustre” response to some companies’ earnings results including pharmaceutical giant Johnson & Johnson and aerospace group Lockheed Martin.

– Key figures around 1425 GMT –
London – FTSE 100: FLAT at 7,617.45 points

Frankfurt – DAX: DOWN 0.1 percent at 14,149.48

Paris – CAC 40: DOWN 0.7 percent at 6,545.16

EURO STOXX 50: DOWN 0.8 percent at 3,753.20

Tokyo – Nikkei 225: UP 0.69 percent at 26,985.09 (close)

Shanghai – Composite: DOWN 0.05 percent at 3,194.03 (close)

Hong Kong – Hang Seng Index: DOWN 2.28 percent at 21,027.76 (close)

New York – Dow: UP 1.1 percent at 34,800.82

Dollar/yen: UP at 128.60 yen from 126.54 yen

Euro/dollar: DOWN at $1.0799 from $1.0802

Pound/dollar: DOWN at $1.3004 from $1.3023

Euro/pound: UP at 83.05 pence from 82.87 pence

Brent North Sea crude: DOWN 4.4 percent at $108.19 per barrel

West Texas Intermediate: DOWN 4.6 percent at $103.23 per barrel