latest situation in ukraine and russia: nuclear power plant under Russian bombs

Ukrainian nuclear power plant under Russian bombs, stock exchanges seek shelter, commodity boom, super bonds

The Russians also bomb a nuclear power plant in Ukraine and the markets are always stormy: heavy losses for the stock exchanges, bonds, and commodities fly

The worst is yet to come,” said President Macron, referring to Putin’s words during yet another inconclusive phone call between the two.

The sinister prophecy found confirmation in the night: the Russians bombed the Zaporizhzhia nuclear power plant, the largest in Europe, hitting it: a fire broke out in the buildings outside the reactor perimeter, but no increase in the radioactivity in the area. Subsequently, the Russians took control of the plant.

The news rained down on the Asian markets where sales intensified in anticipation of a weekend that does not bode well. On the positive side, after a long marathon, an agreement on humanitarian corridors was reached on Thursday evening and the third round of talks is scheduled for next week. But the bombing continues and the Russian fleet prepares to land in Odessa.

In this climate, the structure of war finance takes shape, between the threat of default for the Russian economy, from which the first weak voices of dissent emerge (this is the case of the Yukos oil), and difficulties in moving commercial traffic, starting with oil, this morning at 115 dollars, a price which, Moody’s underlines, will also impact India, Japan, and China, significantly slowing the recovery. 

Russian nuclear power plant, after the attack the reaction of the stock exchanges

  • Stock exchanges in the Asia Pacific fell sharply at the end of the session: Tokyo -2.3%, Hong Kong -2.6%, Shanghai-Shenzhen CSI 300 -1.1%, Seoul Kospi -1.1%, Sensex of Mumbai -2%.
  • Wall Street futures anticipate a 0.7% lower start. Much worse forecasts for the EuroStoxx 50 Index: at the opening, there will be a fall of 2.6%.
  •  The fall of Wall Street is also heavy on Thursday, the Nasdaq falls -1.6%, the S&P 500 index slows in the face of tensions on commodities.
  • The market could probably reward government bonds, which are considered less risky than equities. The 10-year Treasury Note restarts with a yield of 1.80%, the 10-year BTP [FBTP.OTC] from 1.58%, the 10-year Bund from 0.02%. 
  • Purchases with a view to protection push the dollar to its highest level since June 2020, cross Euro Dollar -0.3% at 1.1030. 
  • The pound is also benefiting from the turmoil, pushing it to levels not seen since February 2020. 
  • Brent oil and WTI are up by 1%, pending the agreement on Iranian nuclear power that could be reached over the weekend. 
  • Natural gas starts again from 160 euros per MWh, in yesterday’s session, it hit a new record at 199.99 euros.
  • Gold slightly up by 0.1% to $ 1,937 an ounce, + 6.5% from the beginning of the year.

ECB, war complicates anti-inflation plans

Events run faster than the data available to central banks. The February services index confirms that Europe has overcome the pandemic. he was picking up speed (55.5 versus 51.1). But the Ukrainian war, despite having caused inflation to skyrocket (+ 5.8%, almost triple the target), sent into the attic the considerations of the minutes of the ECB meeting of 3 February which did not exclude the release of QE supports.

The Russian invasion has complicated Frankfurt’s plans and now central bankers, since yesterday in silence ahead of the March 10th directorate, appear strongly divided on which approach is the most appropriate. The ECB will probably reduce stimulus measures but, as Philip Lane pointed out, “with patience”.

The spread returns to 158

  • In this context, the Italian secondary market closed in the red, with the spread at 156 basis points (+ 2.58%) and the 10-year BTP rate at + 1.58%, against + 0.02% for the Bund of the same duration. 
  • Furthermore, the tricolor charter does not seem to suffer too much from the fibrillation in the majority for the reform of the land registry, a new obstacle on the road of the Draghi government.
Bags in free-fall: Milan -2.35%

There was no good news from the Brest talks between attackers and victims, while Vladimir Putin, on the phone with Emmanuel Macron, even upped the ante. The stock exchanges therefore closed the session with a marked decline. Starting from Piazza Affari – 2.35% close to 24 thousand points.

The rest of Europe is also down: Madrid, the worst leaves 3.64%, London -2.55%, Amsterdam -2.16%, Frankfurt -2.09%, Paris -1.84%.

Agencies reject Moscow: closer default 

The forced stop in Moscow continues, closed for the fourth day in a row. Meanwhile, rating agencies Fitch and Moody’s have downgraded Russian debt to junk level. For Moody’s, the long-term debt rating drops from Baa3 to B3. Fitch downgrades from BBB to B, with a negative outlook.

Lse Russia-proof, SocGen almost, Lufthansa advances on Ita

The London Stock Exchange stock leaps up nearly 10% after reporting that the imposition of financial sanctions in Russia will have minimal impact on its businesses.

Lufthansa is deep in the red and loses nearly 8% as it cannot provide a detailed outlook for 2022 due to the conflict in Eastern Europe. But the company yesterday expressed its willingness to proceed with the purchase of a share of Ita, the former Alitalia, in combination with the ally MSC of the Aponte group.

Société Générale closed at -0.75% with a sharp rise in the morning after having argued in a note that it would be able to bear the loss of all assets held in Russia (18.6 billion total exposure). Down also Danone -2.7% and Renault – 5.87% very exposed to the Russian economy. Worst of all is Interparfums -12.5%; the perfume multinational sells 5% of its aromas in Russia.

Crude oil, gas and wheat under stress. Lukoil asks for peace

At the end of the day, the picture of raw materials looked like this:

Brent oil and WTI are down 1%. Lukoil, Russia’s second-largest crude oil producer, has called for an end to the conflict in Ukraine as soon as possible. Sources close to the negotiation say that the nuclear deal with Iran is concluded within 72 hours.

Natural Gas trades at 171 euros per megawatt, down by 2%, from 197 euros per MWh early this morning, a new all-time high. Gas arrivals from Russia at the Tarvisio crossing, on the border with Austria, are regular. Today’s flow is 82 million cubic meters. On the other hand, one of the Yamal RussiaGermany gas pipelines remains. Yamal is one of the three gas pipelines that Gazprom uses to convey its natural gas to Europe. About 10% of total gas supplies from Russia pass through it.

Wheat on record prices on the Chicago Commodity Exchange, Ukraine is one of the world’s largest exporters, up 7% to $ 1,134 per bushel, the Anglo-Saxon unit of measurement used for these commodities. Corn up 3% to $ 747, the highest since 2013.

Tim under € 0.30: skip the coupon, out of Inwit

In Piazza Affari, the drama of the day is not connected to the Ukrainian tragedy. Telecom Italia left 14% on the ground, slipping to € 0.296. approaching the all-time lows of October 2020 marked at 0.2852 euros.

The stock has lost a third of its value since the beginning of the year. Market capitalization shrank to just over € 6.3 billion less than asset write-downs (€ 8.7 billion). Tim ended 2021 with a heavy loss due above all to significant asset write-downs. Payment of dividends to savings shares postponed (first time since 1997).

The Board of Directors has given a mandate to CEO Pietro Labriola to negotiate the sale of the stake in Inwit (1.3 billion) with the Ardian fund but slows down the single network project: “In June we will know more – said Labriola yesterday – I believe that the industrial option is the one that creates the most value, but we do not exclude anything including the possibility of selling the majority of NetCo to a financial partner “.

Meanwhile, the minority shareholder of the secondary network, Kkr (with 37.5% of Fibercop) remains at the window. The board of directors has not yet responded to the offer of 0.505 euros per share of the US fund Kkr.

Piaggio and Cnh save themselves, Eni turns around

Very few stocks managed to close the session in contrast to the list. Among these, Cnh Industrial + 1.6% followed at a safe distance by Campari + 0.2%). 

 Outside the main basket in great light Piaggio + 2.9% after the accounts.

Oil stocks slow down. Eni heavily retracts -4.57% down after the recent rally that brought the stock to the top of the Euro Stoxx 50. Weak also the oil services most involved in the possible recovery of investments in the sector thanks to the rise in oil prices: Saipem -1.78% and Tenaris – 2.04%. 

Banks, the recovery dies down at noon. Generali closes in Moscow

The recovery of the banks which weighed on the risks associated with exposure to Russia lasted just one morning. In particular, Intesa Sanpaolo -2.9%, Unicredit also down -2.41%. It is worse for Banco Bpm -7.3% and Bper -5.23%. The crisis has brought back the maneuvers on risk.

Generali has announced that it will close its representative office in Moscow and leave its positions on the board of the Russian insurance company Ingosstrakh, in which it holds a minority stake of 38.5%, and that Europ Assistance will close its business in the country. 

Brembo brakes, Buzzi out of the Blue chips basket

In the automotive sector, Brembo -4.51 % despite the increase in net profit (+ 57.9%): “The strong and generalized increases in production costs” and the semiconductor crisis weighed on the accounts for the fourth quarter, causing a reduction in Ebitda and margin. The stock then pays off the fears related to exposures in Ukraine and Russia. 

Buzzi Unicem -1.3% is affected by the announcement of the forthcoming exit from the Ftse Mib starting from the revision of 21 March.

Heavily reversed on Gas Plus sales -8.9% after the recent very strong increases. The stock is down by about 5%.

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