The tension in Ukraine leads the European stock markets to red numbers

Stock markets have been following every lead from the Federal Reserve and the European Central Bank for months on interest rate hikes, but events are forcing investors to switch to multi-screen mode. It is no longer just what Jerome Powell and Christine Lagarde say about their stimulus withdrawal schedule that counts. The political risk wins integers in the face of a possible war in Ukraine. And the strong revaluations accumulated in 2021 by Wall Street, which has hit record highs again and again on the back of the strong injection of public liquidity to combat the pandemic, and by some European indices such as the German Dax, raise fears of price overheating of stocks that encourage profit-taking.

The cocktail was completed this Friday by a massive expiration of derivatives in the US, and the negative opening of the New York Stock Exchange did not help to curb sales in Europe.

The Ibex 35 lost 1.36% at the close of the session.

The EuroStoxx 50 fell 1.63%.

And the trend was similar in the main European stock markets, with Paris and Frankfurt bordering on drops of 2%.

The markets usually try to anticipate the progress of the economy with long lights, and despite the fact that the US and Russia have agreed to deepen the dialogue to cut the escalation, if the buzz grows, a war in Ukraine, the worst scenario for recovery will enter more and more as a hypothesis to be taken into account in the risk system of large funds.

Some analysis houses, such as Axa Investment, are already guessing about its economic impact. “Safe assets would do very well, equities would sink due to risks to economic growth, and the dollar would soar against the euro because a war in Ukraine would be a very immediate practical problem for Europe due to the arrival of refugees, higher natural gas prices and the need for a united response by EU nations.

The energetic component of the dispute is one of the most disturbing. Europe has dealt in 2021 with unusually high electricity prices due to its dependence on gas. According to analysts at Axa IM, this gives Moscow a key role. "Russia has a strong card to play in terms of supplying natural gas to Europe and further price increases could do real damage to European economies," he warns.

Cryptocurrencies, once considered assets independent of the evolution of the stock markets, but increasingly correlated with stocks —as the International Monetary Fund pointed out in a recent report—, also experienced a black day. Bitcoin tumbled more than 5% and hit six-month lows below $38,000. It has already lost nearly half of its value since November's record highs. Ethereum, the second largest digital currency, lost more than 13% this Friday.

If prolonged, the geopolitical uncertainty would not only affect the stock markets.

After some GDP growth data that is expected to close below expectations in 2021, this year appears, according to the forecasts of experts and large international organizations, as the one with the greatest recovery of the Spanish economy since the outbreak of the pandemic .

Therefore, the effects that the train crash in Ukraine may have on tourism or inflation, together with issues such as the effects of the ECB's withdrawal of stimuli on the payment of interest on the debt, and the evolution of the omicron variant , threaten to undermine activity.