[런던=뉴스핌] Correspondent Jang Il-hyeon = On the 19th (local time), stock markets in major European countries fell all at once. As the United States allowed long-range missile attacks on Ukraine and Russia lowered the threshold for using nuclear weapons, a sense of crisis that the war in Ukraine would intensify into a more deadly situation swept through the market.
The STOXX600 index, a pan-European index, closed at 500.60, down 2.24 points (0.45%) from the previous day. This is the lowest figure since August 12 (499.08). This is a situation where it could fall below the 500 line at any time.
The DAX index of the Frankfurt stock market in Germany closed at 19,060.31, down 128.88 points (0.67%), and the CAC40 index of the Paris stock market in France closed at 7229.64, down 48.59 points (0.67%).
The FTSE 100 index of the London stock market also closed at 8099.02, down 10.30 points (0.13%).
The FTSE-MIB index on the Milan stock market in Italy closed at 33,324.73, down 433.70 points (1.28%), and the IBEX 35 index on the Madrid stock market in Spain closed at 11,588.40, down 86.40 points (0.74%).
As North Korea dispatches more than 10,000 troops to Russia, the war in Ukraine is embroiled in a new upheaval, and the United States lifts the seal on the long-range missile ATACMS, which it had maintained so far, and the war situation is heading towards its worst.
ATACMS is a tactical surface-to-surface ballistic missile with a maximum range of 300 km. On the 17th, U.S. President Joe Biden allowed Ukraine to attack targets in mainland Russia with this missile.
In response, Ukraine fired six Atams missiles at military facilities in Russia’s Bryansk Oblast on the 19th.
Russia maximized its threat by revising its doctrine on the use of nuclear weapons. On this day, President Vladimir Putin approved the nuclear doctrine, which states that countries that do not possess nuclear weapons can use nuclear weapons even if they attack Russia. This opened the way for nuclear weapons to be used against Ukraine at any time.
The market reacted quickly. Funds moved to safe assets such as gold and dollars.
The Euro STOXX volatility index, the ‘fear index’ of the European market, recorded 19.23, the highest figure this month.
The benchmark index of Poland, which borders Ukraine, fell more than 3%, the largest drop among indices in Europe.
“Every country wants to avoid nuclear war, but seeing Putin take a step toward that possibility has seen international capital move to safe havens,” said Daniela Hasson, senior market analyst at Capital.com.
“It is clear that people are looking for ways to keep their money safe, at least for now, but we are not seeing any panic or serious selling yet,” he said.
European markets are also paying close attention to who U.S. President-elect Donald Trump will appoint as Treasury Secretary and Trade Representative (USTR).
Just as they did last week when they nominated candidates for the Minister of Defense and the Minister of Health and Welfare, they seemed concerned that someone who would shock the market would appear again.
“European investors are starting to ask questions about the impact of Trump’s policies that could impact inflation, including tax cuts,” said Richard Hunter, head of markets at Interactive Investor, a leader in artificial intelligence (AI) chips expected to be announced on Wednesday. “We are also waiting for the earnings announcement from the leading company, Nvidia,” he said.
Reuters said, “European Central Bank (ECB) policymakers are concerned about how much U.S. trade tariffs could hurt the growth of the euro zone (20 countries that use the euro),” and added, “As a result, the market is uncertain about the ECB’s rate cut trajectory.” “We are watching closely to see if there are any signals,” he said.
Among major sectors, the automobile and luxury goods industries fell 1.07% and 1.02%, respectively, and banking stocks, including Unicredit (-2.23%) and Raiffeisen (-2.48%), which are sensitive to Russian issues, fell 1.70%.
Featured stocks rose 3.8% after German defense company Rheinmetall announced that it aims for sales of 20 billion euros in 2027. French airport operator Aeroport de Paris rose 3.4% after Stiefel upgraded its rating to ‘buy’ from ‘hold’.
Caixabank, Spain’s largest bank and insurer, fell 5.3% after announcing its strategic plan for 2025-2027. Nestle also fell 1.5%.
In what ways could changes in monetary policy by the European Central Bank (ECB) affect the stock market’s response to geopolitical tensions?
1. Introduction - Can you please tell us about the recent fall in European stock markets and how it’s being linked to the escalating tensions in Ukraine and Russia?
2. Impact of Nuclear Threats – How do you think the recent revision in Russia’s nuclear doctrine, which allows the use of nuclear weapons against countries that don’t possess them, is impacting global markets?
3. Impact on Safe Assets – Are we seeing a surge in demand for safe assets such as gold and dollars as investors look to protect their wealth amid these tensions?
4. Concerns about ECB’s rate cut trajectory – What role do you think the ECB’s monetary policy stance could play in mitigating the impact of these geopolitical developments on European markets?
5. Sector-specific impacts – Which sectors have been most affected by the recent market downturn and how are they connected to the ongoing conflict?
6. Resilience of certain stocks – Despite the overall downturn, are there any companies that have managed to remain strong or even show growth amid the volatility?
7. Possible solutions – As market analysts, what could be some potential solutions or strategies to mitigate the impact of these geopolitical uncertainties on global stock markets?
