© Alexander Zemlianichenko/APA currency exchange office in downtown Moscow, as the ruble hits new record lows against the US dollar.
Closing summary
Russian MICEX tumbles 10.7%, wiping off more than cost of Sochi
Markets close: Big falls across Europe; DAX slides 3.3%; FTSE 100 down 101 points
Earlier: Russian central bank hikes rates as ruble hits record low
6.21pm GMT
And our latest news story on the market turmoil today is here, also being updated:
Ukraine crisis sends Russian stock market tumbling
6.20pm GMT
REMINDER: Our main Ukraine liveblog is here, being updated through the evening from America:
Ukraine crisis: Russia says Nato pressure 'will not help stabilise the situation' - live
6.17pm GMT
Another catch-up of events in the financial markets over the last few hours:
Some ยฃ34bn, or $58bn, has been wiped off the Russian stock market today by the Crimea crisis, more than the cost of the Sochi Olympic games.
The MICEX index closed down 10.7%, with several major companies dropping at least 20%, in as a "selling spree" gripped the Moscow market.
The ruble has also hit record lows against the US dollar.
The selloff prompted the Russian central bank to spend at least $10bn propping up its currency, having hiked interest rates from 5.5% to 7% early this morning.
In Europe, the FTSE 100 fell 101 points while Germany's DAX suffered its biggest one-day fall since the height of the eurozone crisis - down 3.4% by the close.
On Wall Street, the Dow Jones index has joined the selloff-- down 184 points, a drop of 1.3%, in afternoon trading.
The crisis has forced Austria's third-largest bank, Raiffeisen, has put the sale of its Ukrainian division, Bank Aval,on hold.
Money has surged into government bonds, driving down the interest rates on US and UK bonds....
...although some analysts, including JP Morgan's Stephanie Flanders, reckons some Russian assets look pretty affordable now.
But there is optimism over the US economy after two manufacturing surveys beat forecasts. Both the ISM and Markit found that factory growth picked up last month.
And Bill Gates has become the world's richest person, again.
Our earlier lunchtime summary has the key points from this morning.
And that's all for today. Do keep watching our main Ukraine crisis blog for the latest news tonight.
Thanks. GW
Updated at 6.19pm GMT
6.02pm GMT
Here's the highlights of the latest summary from our main Ukraine live blog:
- The Russian military presence in Crimea continued to build, with troops massing outside Ukrainian military facilities, patrol boats sighted and Russian forces establishing control of both sides of the Kerch channel separating Crimea from Russia.
- The Russian foreign ministry warned that Nato criticism of its activity in Crimea "will not help stabilise the situation in Ukraine." On Sunday Nato said it "condemns the Russian Federation's military escalation in Crimea."
- US vice president Joe Biden, in a call with Russian prime minister Dmitry Medvedev, urged Russia to pull back its forces. Medvedev saidit was necessary to protect all Russians including those in Ukraine.
- Russia has requested a third emergency meeting of the UN security council over the crisis in Ukraine.
#EU leaders to meet for extraordinary summit to discuss #Ukraine on March 6 -- statement @euHvR5.57pm GMT
- Luke Baker (@LukeReuters) March 3, 2014
Meanwhile in Spain, Christine Lagarde has sparked a row by telling an event in Bilbao that the Spanish labour market requires further reform.
Lagarde told the Global Forum on Spain in Bilbao that:
Thanks to the formidable actions over the past five years, Europe - and Spain - are now turning the corner. Yet the task is far from finished. Growth remains too low and unemployment too high for us to declare victory on the crisis.She then insisted that the "strong reform momentum must be maintained", and that reforms "should not benefit those in work but those without it".
Our correspondent in Spain, Stephen Burgen, reports that the IMF chief was immediately attacked for, in effect, advocating more wage cuts:
Joaquรญn Almunia, the European competition commissioner, who was also in Bilbao, criticised Lagarde for calling for wage cuts, which he said would be "neither sensitive, reasonable nor fair".More here: Christine Lagarde angers Spain with repeat prescription of austerity
"Sacrifice has to be shared, and economists should not demand what is not viable in practice," he said.
5.39pm GMT
Ruble rattled
© Reuters
It is changing hands around at 36.5 to the dollar, a drop of 1.5%, despite its central bank spending at least $10bn to support the currency - and this morning's emergency interest rate hike.
5.23pm GMT
Capital Economics just issued research note on the Ukraine crisis, by their analyst Julian Jessop.
He reckons the fallout of Russia's incursion into Crimea could be short-lived, but also compares the crisis to the 2008 conflict with Georgia - and concludes by suggesting an IMF-led bailout of Ukraine could leave less money to help eurozone countries in future.
I've pasted part of it below:
Fallout from Ukraine rattles global marketsUpdated at 5.35pm GMT
More generally, there are a number of points to make about history, economics and the financial market implications.
First, we have been here before. Russia and Georgia fought a brief war in August 2008 over the disputed territory of South Ossetia, which has many similarities with recent developments in Ukraine. The key point is that the conflict was short-lived and ended by an EU-sponsored ceasefire. Russian forces still occupy South Ossetia which has now declared independence from Georgia, a position that very few other countries officially recognise but no-one can realistically do anything about. A similar outcome in Crimea would soon drop out of the daily headlines (as have the ongoing tragedies in Syria and South Sudan).
Second, though, Ukraine is roughly ten times larger than Georgia in terms of population (45 million vs. 5 million) and GDP ($180bn vs. $16bn). Ukraine's financial markets and external debts are correspondingly much greater and it is a more credible candidate for EU membership in due course. Indeed, unlike Georgia, Ukraine shares borders with four current EU members. Third, regional turmoil could also have a major impact on the Russian economy itself and on its trade, particularly in energy, with the rest of the world. The country's financial markets and currency have already been hit hard, prompting an emergency rate hike Monday morning in an attempt to stem capital outflows.
Two specific risks are worth dwelling on. One is the possibility of the disruption to the supply of Russian energy to the European Union, whether as a result of Western sanctions or Russian manipulation. Russia is of course a major supplier of oil to Germany and the Netherlands in particular and of natural gas to Western Europe generally. However, disruption to energy trade would be in neither side's interest, especially Russia's as it would simply encourage EU customers to seek more secure supplies elsewhere. We suspect that any Western sanctions will only target individuals and political and cultural links, rather than trade.
The other issue is the financial burden of supporting Ukraine. The country needs around $25bn soon to refinance debt and pay other bills for goods and services. Over the longer-term, the cost of supporting the transition could run into the hundreds of billions of dollars. These are not particularly large sums when measured against the combined resources of the IMF and the major advanced economies who might be willing to offer bilateral support. Nonetheless, every dollar spent on Ukraine is a dollar not available to finance bailouts elsewhere, including the weaker economies of the euro-zone. <end>
5.07pm GMT
Update - the German DAX has now officially closed, and it's an even deeper fall than initially thought.
Germany's index of leading shares tumbled 333.19 points to 9,358, a drop of 3.44%.
That's very slightly worse than the 3.41% tumble on 1 June 2012. Josh Raymond of City Index says its the biggest decline since November 2011, when the eurozone crisis was raging.
biggest 1-day fall in #DAX since November 20114.56pm GMT
- Joshua Raymond (@Josh_CityIndex) March 3, 2014
The selloff is picking up pace on Wall Street, where the Dow Jones is now off 211 points or 1.3%.
As our main Ukraine liveblog reports, Russia has now requested a UN security council meeting later tonight to discuss the situation.
4.52pm GMT
Nervy investors have fled shares in favour of safe government debt.
The price of US Treasury bills has risen today, pushing down the yield (interest rate) on 10-year US debt to 2.6%, from 2.65% on Friday.
British gilts also rallied, with the yield on 10-year UK debt down at 2.65% from 2.72%.
Phil Orlando, chief equity market strategist at Federated investors, said it was a classic flight away from risk:
"We just have no way of knowing how this is going to play out...It's a very uncertain situation and the market is demonstrating its unhappiness with that." (quote via AP)4.48pm GMT
Big losses in London too, where the FTSE 100 has just closed down 101 points at 6708, a fall of almost 1.5%.
4.41pm GMT
European stock markets suffer deep losses
European stock markets have closed with heavy losses across the board, as events in the Crimean peninsula hit investor confidence hard.
The German DAX provisionally ended 3.3% lower, in its biggest one-day fall since May 2012 (as explained at 4.04pm, many firms have big exposure to the Russian economy).
Italy's FTSE MIB also shed 3.3%, with Unicredit bank dragged down almost 6% by fears over its exposure to Ukraine.
RT @Fmirw: #Italy's Unicredit among the top 10 lenders in #UkraineFranc's CAC fell 2.7%, and the Spanish IBEX dropped 1.5%.
- John Hooper (@john_hooper) March 3, 2014
And the EuroSTOXX bank index, which tracks financial stocks across the region, slid 3.8% -- in its biggest one-day fall since last August.
Markets: Sea of red due to Black Sea dread..4.26pm GMT
- Lorcan Roche Kelly (@LorcanRK) March 3, 2014
Stat of the day:
Russia MICEX index sees its market capitalisation down $58.4 bln in one day - more than the $51 bln or so Moscow spent on Sochi Olympics4.25pm GMT
- Lidia Kelly (@LidKelly) March 3, 2014
The Ukraine crisis continues to drive the wheat price higher. It's currently up 4% in the London futures market, reflecting concerns that supplies from the world's fifth-largest supplier could be hit.
Updated at 4.28pm GMT
4.05pm GMT
The other Russian stock index, RTS, fell even further:
The Russian stock index RTS closed the day down 12%. Has to be one of the worst days ever for Russian stocks.4.04pm GMT
- financial acrobat (@finansakrobat) March 3, 2014
Updated at 4.05pm GMT
Russian stock market tumbles 10.7% in wave of fearful selling stock
© Reuters
The MICEX index closed down 10.7% at a nine-month low, with every share on the index losing ground.
Mostotrest, the biggest Russian heavy construction company, tumbled by 25% today. It was followed by electricity transmission firm Rosseti, down 22.8%.
Mining firm Mechel lost a fifth of its value.
The prospect of the situation escalating further drove a wave of selling in Moscow through the day, wiping more than $50bn off the index by the close.
Dmitry Kulakov, head of equity trading at Olma investment house, bluntly summed it up:
Frightened by the situation around Ukraine, investors held a selling spree of Russian assets.
© Reuters
3.53pm GMT
A string of big-name German companies have seen their share prices hit today by the Ukraine crisis.
That has sent Germany's DAX down 2.9% in late trading, making it the worst-performing major stock index outside Moscow.
Major industrial firms and manufacturers dominate the biggest fallers on the DAX this afternoon, including chemicals maker BASF,pharmaceuticals firm Bayer, auto maker Volkswagen, and Siemens.
© Reuters
The German DAX has borne the brunt of European market losses today given that German companies do an awful lot of business with Russia.3.35pm GMT
After an hour's trading in New York, the Dow Jones industrial average remains firmly in red - now down 150 points, or 0.95%, at 16168.
Manufacturing giant and conglomerate General Electric is the biggest faller, down 1.7%. Financial stocks are under pressure, with JP Morgan and Goldman Sachs both down around 1.2%.
Updated at 3.36pm GMT
3.31pm GMT
Nigel Green, founder and CEO of deVere Group, a wealth management firm, reckons today's market selloff is a "bump in the road" rather than the start of a crash.
Sounding pretty upbeat, Green declared:
"I'm not worried that we are about to slump into another global recession as a consequence of the deepening crisis in Ukraine."...and reckons stock markets will soon be more sanguine about the escalating tensions in the region:
"As the situation regularises, in whichever form that might take, and the world becomes accustomed to the new and/or existing realities, investors are likely to classify the Ukraine-Russia stand-off as 'a local issue.'We'll know in a few weeks if he's right....
"Global financial markets will then return to focusing on key fundamentals, such as the improving trend of US economic data, than to what is happening in Ukraine."
3.26pm GMT
David Crow, assistant news editor at the Financial Times, flags up that the ยฃ34bn wiped off the Russian MICEX index today (see 1.56pm), is actually more than the cost of the Sochi Olympics:
the value wiped off the russian stock exchange today - $58bn - more than the cost of Sochi.3.14pm GMT
- David Crow (@davidcrow83) March 3, 2014
The ISM survey of America's manufacturing sector has beaten forecasts, mirroring Markit's survey an hour ago (see 2.13pm)
The Institute for Supply Management's healthcheck of factory activity jumped to 53.2, up from January's 51.9, which was disappointingly weak.
That indicates growth accelerated as new orders picked up after bad weather cause disruption at the start of 2014.
ISM index climbs to 53.2% in February http://t.co/ZGZDgJ2DC33.06pm GMT
- MarketWatch (@MarketWatch) March 3, 2014
Austria's third-largest bank, Raiffeisen, has put the sale of its Ukrainian division, Bank Aval, on hold following the latest developments in the country.
A spokeswoman for the bank tells us:
Various parties with interest in purchasing Raiffeisen Bank Aval have approached RBI already some months ago.FastFT has more details here, explaining that Bank Aval operates 818 branches in Ukraine and has 3.1m customers.
A possible sale of our Ukrainian operations is on hold for now, however, due to the situation in Ukraine.
Raiffeisen's shares are down 8% today. It is thought to be one of the banks with the biggest exposure to Ukrainian debt (more details).
Bank exposure to Ukraine...Austria, France & Italy most exposed... pic.twitter.com/TbSCMciaF72.37pm GMT
- Voltaire (@PhilipEtienne) March 3, 2014
Wall Street falls at the open
The New York stock market has opened, and shares are falling as expected.
The Dow Jones industrial average shed 132 points, or 0.8%, at the first few minutes of trading to 16190.
The technology stock-heavy Nasdaq index dropped 1.1%, and the S&P 500 is down 0.8%.
Gold, though, is up 1.5% at $1,347/ounce, gaining $20 today.
Joao Monteiro, analyst at Valutrades explains:
Investors sought safer havens such as gold and fled equities after the United States' government conceded that Russia now has control of Crimea in Ukraine.2.28pm GMT
Reminder: my colleague Haroon Siddique is liveblogging all the action from Ukraine, here.
The latest line is that the Russian foreign ministry has said that US secretary of state John Kerry's recent comments on the crisis are 'unacceptable", and contained threats against Russia.
2.22pm GMT
The US stock market is expected to follow Europe's lead when Wall Street opens in around 10 minutes.
The Dow Jones industrial average is tipped to fall at least 100 points, having closed at 16,321 on Friday night, before Russian troops crossed the Ukranian border.
Here's the situation in Europe right now.
FTSE 100: down 100 points at 6709, -1.5%
German DAX: down 287 points at 9404, -2.96%
French CAC: down 104 points at 4303, -2.4%
2.13pm GMT
America's factory sector grew faster than expected in February, according to Markit's monthly survey.
The US manufacturing PMI jumped to 57.1, up from 56.7 in January. That may calm concerns that bad weather has hurt the world's largest economy.
Firms reported a jump in output and new orders, while job creation hit an 11-month high.
Chris Williamson, chief economist at Markit, says it's "one of the largest monthly improvements in manufacturing for almost four years". It appears that firms caught up with orders that were lost when the polar vortex inflicted icy weather on the US.
Encouraging, but also a reminder that the Ukraine crisis comes as the global economic recovery remains fragile.
US Manufacturing #PMI at 57.1 in February, up from 53.7 in January http://t.co/QSsTJhOSVipic.twitter.com/ACjT1ZGqTo1.57pm GMT
- Markit Economics (@MarkitEconomics) March 3, 2014
David Thebault, head of quantitative sales trading at Global Equities in Paris, reports that many investors had failed to predict Russia's military incursion into Crimea. Thus this morning's selloff:
"Investors had underestimated the risks of an escalation in Ukraine, so the events over the weekend are a wake-up call for the market."1.56pm GMT
More than ยฃ34bn has been wiped off the value of the companies listed on Russia's MICEX index today (which is currently down 12%)
Via Reuters:
On Monday afternoon, MICEX capitalisation stood at 18.4 trillion roubles [$512.03bn or ยฃ301bn], down from 20.5 trillion on Friday, the press service said in a statement.1.27pm GMT
Good morning America:
For US folks just waking up, this will open your eyes - Russian stocks down 11% today: pic.twitter.com/reFBjktNo81.26pm GMT
- Jamie McGeever (@ReutersJamie) March 3, 2014
© Forbes
Gates ($76bn) swept Mexico's telecoms magnate Carlos Slim ($72bn)aside after seeing his fortune rise by $9bn in 2013, Forbes reports.
Amancio Ortega ($64bn), who controls the firm behind Spain's Zara fashion chain, is third followed by everyone's favourite cherry coke-swilling value investor, Warren Buffett ($58bn).
The report also shows an increase in the number of women billionaires overall, up to172 out of 1,645 in total.
Mark Zuckerberg saw the biggest increase in wealth, with his fortune jumping by $15.2bn to $28.5bn as Facebook shares soared last year.
Updated at 1.32pm GMT
1.05pm GMT
Joshua Raynond of City Index says there are four key reasons for shareholders to be very concerned about the situation:
1. The potential of the situation to deepen and intensify remains large.
Russia has been known to be unpredictable in the past and its aggressive and quick action in the region, along with parliamentary backing for further troop deployment not just in Crimea but the Ukraine as well, shows that it remains steadfast to increase its presence in the region. Russia has historically shown that it will protect its assets and people without hesitation. This is exactly what it is doing.
2. The reaction of the G7 is crucial.
Do they call Russia's bluff? Even if Ukraine strikes at Russian troops in the Crimea region, it will still be the response of the G7 that holds the key for complete market volatility and fear. It's hard to see at this stage, with Russia holding all the cards, for the west to dramatically do anything other than appease Russian aggression.
3. A quick look at oil prices shows the impact this situation could have.
Nymex front month oil futures prices hit their highest level since September last year, hitting $104 a barrel. Further oil price rises will have a knock-on effect on stocks and sectors that rely on a stable oil price to keep fundamental costs down. Rising oil prices is a direct threat to the ability of stocks to rally in the near term. This needs to be watched.
4. Key indices have also hit major resistance levels
The crisis could give investors the excuse they need for a 5%-10% market correction.
Market corrections are healthy for the long term bullishness of major indices and as such, should not be feared. However, with the FTSE 100, DAX and Dow Jones all recently hitting levels which triggered selling, a small price correction could now be due. So if anything, the timing of the Ukraine crisis may have well triggered the inevitable.
12.45pm GMT
Stephanie Flanders, JP Morgan's chief market strategist for UK and Europe (and former BBC economics editor) suggests today's heavy selloff in Russian stocks has created some real bargains for investors:
"Events in Ukraine have clearly pushed investors into "risk-off" mode, especially when it comes to emerging market assets. Aside from this short-term volatility, we would still say the direct economic and financial fallout from Ukraine itself was fairly limited - though markets are perhaps not focused enough on the broader contagion that could follow a messy Ukrainian sovereign default.12.28pm GMT
However, Russia's involvement clearly magnifies the scope for contagion and increases the possibility that global energy prices will be affected both directly and indirectly, because of Russia's previous negotiating role in the Middle East.
We have been saying for some time that emerging market assets look cheap, and Russia's looked cheaper than most. At these prices, you don't have to take a very optimistic view of Russia's future to see some potential bargains."
Updated at 12.45pm GMT
Midday summary: Crimea crisis sends markets sliding
To recap:
Russia's military invasion of Crimea over the weekend has hit stock markets hard today, with shares falling across the board as Europe faces its biggest crisis in years.
The MICEX Russian index has now tumbled almost 12% as investors brace for the possibility of economic sanctions against Moscow. There was a wave of selling, as traders took their first opportunity to react to the arrival of thousands of Russian troops in Ukraine.
Russia's central bank conducted an emergency interest rate rise, in an attempt to prop up its currency and maintain financial stability.
It also spent an estimated $10bn intervening in the foreign exchange markets. But the ruble still fell another 2% to fresh record lows against the US dollar and euro.
Analysts warned that the Russian financial system will come under growing pressure unless the crisis eases, and could suffer wide-spread capital flight.
© Guardian
...and the cost of insuring Russian government bonds has risen to a nine-month high.
Wheat prices have risen by 3%, on fears of supply disruption from Ukraine.
The oil prices jumped, with Brent crude gaining $3 per barrel to $112. And gold has risen $20 per ounce, to $1,345.
In Europe, the FTSE 100 index of leading blue-chip shares has fallen by 135 points, or 2%.
Germany's DAX has lost 2.9% over in Frankfurt as investors watched events nervously. Every main index is down.
Think "broad-based sell off" covers Euro equities quite well at the moment.The prospect of sanctions being imposed on Russia looms over the world economy, with Carl B. Weinberg of High Frequency Economics cautioning that:
- Lorcan Roche Kelly (@LorcanRK) March 3, 2014
Economic war with Russia, if this escalates, would take a toll on the global economy.CMC Markets Toby Morris added:
For anyone who keeps their eye on the news over the weekend it's little surprise that the markets are totally dominated by events in Russia and Ukraine this morning, with European benchmarks sinking on the open as tensions threaten to derail February's recovery.In other news, France's manufacturing sector moved closer to stabilisation, according to Markit's monthly PMI survey.
And UK factories added staff at the fastest rate in almost three years.
REMINDER: our full liveblog on the political and military situation in Ukraine is here.
© Stringer/Germany/ReutersThe DAX board at the Frankfurt stock exchange this morning.
11.53am GMT
French banks are being hit hard by the selloff, with Sociรฉtรฉ Gรฉnรฉrale tumbling more than 6.5% and BNP Paribas down 3.5%.
Sociรฉtรฉ Gรฉnรฉrale is the foreign bank with the largest branch network in Russia, Bloomberg flags up.
11.51am GMT
The selloff is deepening in London as noon approaches, with the FTSE 100 now down 128 points or almost 2%.
Germany's DAX has slumped 2.7% in the face of the Ukraine crisis, following the news that Angela Merkel concluded Vladimir Putin had 'lost the plot' after speaking to the Russian leader last night.
#ukraine merkel thinks putin's lost the plot http://t.co/5XrqY6nsttCruise operator Carnival is one of the biggest fallers, down 4%, reflecting fears for the global economy. Advertising giant WPP is also down 4% - last week, it warned that emerging market volatility was hitting its profit margins.
- Ian Traynor (@traynorbrussels) March 3, 2014
11.32am GMT
Wheat futures prices have jumped this morning, on fears of supply disruption from Ukraine - which is the world's fifth-biggest supplier.
The cost of a tonne of wheat for delivery in May has risen over 3% this morning, to โฌ202.75 per tonne, the highest price this year.
Luke Mathews, analyst at Commonwealth Bank of Australia, told clients this morning that:
"The importance of the Black Sea region to global grain markets should not be understated."The WSJ has a good take on the wheat situation, pointing out that wheat farmers are holding onto their crop while the Ukranian hryvnia continues to slump in value (hitting new low this morning)
Updated at 11.36am GMT
10.59am GMT
Reuters has fresh details of the Russian central bank's efforts to prop up its currency:
So the invasion of #Crimea didn't come cheap: forex dealers reckon #Russia central bank has spent up to $10 bln defending the rouble today10.53am GMT
- Luke Baker (@LukeReuters) March 3, 2014
Updated at 11.08am GMT
© Yoshikazu Tsuno/AFP/Getty ImagesA share price board in Tokyo, where the Nikkei index fell 188.84 points, or 1.2%.
Stocks are in the red as Russia sends troops into Ukraine.10.40am GMT
The move by Moscow has been criticised by the west and world leaders are trying to prevent an all-out war. Traders have abandoned equities and fled to safe havens like gold. Oil and gas prices have also surged, as over two thirds of Russian gas that is exported to the EU is piped through Ukraine and if tensions escalate gas supplies to the west could be cut.
British banks have been hit by concerns over exposure to Russian and Ukrainian banks; with the credit lines in eastern Europe drying up, the banking system in western Europe is feeling the pinch.
Europe's stock markets are a classic 'sea of red':
© Reuters
In Moscow, the ruble's tumble to record lows against the US dollar and euro is clearly on display:
© Alexander Zemlianichenko/APA currency exchange office in downtown Moscow this morning.
Britain's factory sector also posted another healthy rise in output last month.
Markit reported that the UK manufacturing PMI rose 56.9, from 56.6 in January, showing faster growth. The subindex which measures job creation hit its fastest rate in almost three years.
10.14am GMT
Away from the Ukraine crisis, there are signs this morning that France's manufacturing decline may be halting.
The monthly survey of purchasing managers conducted by Markit showed that French factories reported only a small drop in activity in February.
That pulled France's PMI up to 49.7, close to the 50-point mark that separates expansion from contraction.
The overall eurozone PMI fell slightly, to 53.2, from 54.0 in January -- which is still the eighth monthly expansion in a row.
Chris Williamson, Chief Economist at Markit said:
"The dip in the manufacturing PMI, its first fall for five months, is a disappointment and a reminder of the hesitant nature of the region's nascent recovery. However, we should not lose sight of the fact that this is the second-strongest reading that the eurozone has seen for almost three years.Firms also reported a rise in new orders, and a backlog of new work, while employment levels also rose for the second month running.
Here's the key charts:
© Markit
© Markit
As well as hiking rates, the Bank of Russia also appears to have spent several billion dollars to prevent the ruble falling even further:
Russian C.Bank has sold over $10Bn to support Ruble today9.55am GMT
- Steve Collins (@TradeDesk_Steve) March 3, 2014
The US stock market is expected to join the selloff when New York traders reach their desks in a few hours time (Wall Street opens at 2.30pm GMT or 9.30am local time):
Marketwatch has the details:
Futures for the S&P 500 index -0.85% fell 13.9 points, or nearly 0.8%, to 1,843.70, while those for the Dow Jones Industrial Average -0.70% tumbled 102 points, or 0.6%, to 16,205. Futures for the Nasdaq-100 index -0.89% dropped 27.75 points, or 0.8%, to 3,667.50.9.50am GMT
European market update
© ReutersBiggest fallers on the FTSE 100 this morning.
It's a fairly broad-selloff in London, with financial firms, some miners and energy providers, and even travel firms all hit by fears that global economic growth will be shunted by the unfolding crisis.
Other European markets are also siding, with Germany's DAX down over 2%, while Russia's main indices are still down 10% as the panicky selloff in Moscow continues.
The possibility of economic sanctions being imposed on Russia is pushing the oil price price up, with Brent crude currently up almost $2 per barrel at $110.8.
As Associated Press puts it:
Traders were jittery over warnings by Washington and other governments that Moscow, an oil exporter, might face sanctions after it seized control of Ukraine's Crimean Peninsula.Gold producer Randgold is one of the few companies to rise in Europe today, up 4.1% as nervous traders push the gold price up this morning.
"Economic war with Russia, if this escalates, would take a toll on the global economy," said Carl B. Weinberg of High Frequency Economics in a report.
Capital flight fears continue to pin the ruble at record lows against the US dollar (see analyst comments here), while Russian and Ukrainian government debt is also weakening.
Oh dear. Interest rates on Ukraine six-month govt debt just went through 50%. pic.twitter.com/BSSKXEPEsY
- Ed Conway (@EdConwaySky) March 3, 2014
Ponder - has Putin made a big Western financial package to Ukraine more likely whilst damaging his own economy?9.39am GMT
- Duncan Weldon (@DuncanWeldon) March 3, 2014
Ukraine's currency has also weakened this morning to a new record low, Reuters flashes up:
9.36am: UKRAINE HRYVNIA FALLS TO 11.6510 TO THE U.S. DOLLAR VS 10.8510 HRYVNIA AT FRIDAY'S CLOSE
This may be one reason why:
Uh-oh -- Gazprom CFO says company studying the possibility of gas price increases for #Ukraine from April9.23am GMT
- Luke Baker (@LukeReuters) March 3, 2014
Updated at 9.59am GMT
The ruble has fallen against every other major currency -- particularly against the yen, as traders seek a haven for their money.
FX story of the day - Ruble getting rumbled pic.twitter.com/jcIx2a4ay39.13am GMT
- World First (@World_First) March 3, 2014
Ruble tumbles: what the analysts say
Russia faces the risk of an exodus of capital as the crisis continues despite its central bank emergency rate rise this morning, analysts warn.
Kit Juckes of Societe Generale predicts further "risk aversion" as the West seeks a diplomatic solution, writing:
The ruble, the Hungarian forint and the Turkish lira will remain vulnerable to contagion in the region and wider-scale capital flight from Russia must be a risk.Danske Bank chief analyst Lars Christensen agrees, tweeting:
Russia is unlikely to back down in its support of the regional government in Crimea. The importance of Ukraine as a link in Europe's energy supply line and as the point where Russia and the European Union meet, makes the idea that either side just backs down hard to imagine, but equally, provides plenty of incentives to work towards a diplomatic solution. So this will take time.
Sharp sell-off in RUB. CBR just hiked interest rates by 150bp - The military actions in Crimea are not without significant costs forRussua
- Lars Christensen (@MaMoMVPY) March 3, 2014
Tim Ash, Standard Bank: "Complete tosh to think that all this aggressive action by Moscow will have no effect on the Russian economy"9.03am GMT
- Katie Martin (@katie_martin_FX) March 3, 2014
Our Ukraine Liveblog
My colleague Haroon Siddique is live-blogging the Ukraine crisis in detail again this morning, here:
Ukraine crisis: 'Russia in control of Crimea' - live updates
- Russia has 'complete operational control' - US official
- 'Russian armoured vehicles lining up across border'
- Lavrov says China's views coincide with Russia's
The cost of insuring Russia's government debt against default has jumped to a nine-month high following Putin's incursion into Crimea, and Russian bonds have also dropped in value.
Five-year Russian credit default swaps are changing hands at 225 basis points, up from 192 last night. That means it would cost $225,000 per year to insure $10m of five-year debt.
8.46am GMT
Ruble at record low
© Reuters
It is trading at 36.44 to the US dollar, breaking through the previous low set in 2008.
The ruble also hit its weakest level ever against the euro, at 50.03.
There's no respite on the Moscow stock market, where around 10% has been wiped off the country's biggest listed companies.
Shares in Gazprom have tumbled 12%, on fears that gas supplies could be hit by the crisis.
The Russian stock index Micex down 11% pic.twitter.com/aJTiziLNoP8.28am GMT
- financial acrobat (@finansakrobat) March 3, 2014
Updated at 9.48am GMT
While shares slide, the gold price has risen more than $20 per ounce to $1,347/oz on the back of the escalating geopolitical tension over Ukraine.
8.19am GMT
Some news flashes from British foreign secretary William Hague, agreeing with the US that Crimea is now under the operational control of Russia:
- BRITISH FOREIGN MINISTER HAGUE SAYS RUSSIA HAS TAKEN OPERATIONAL CONTROL OF UKRAINE'S CRIMEA
- BRITISH FOREIGN MINISTER HAGUE SAYS VERY CONCERNED ABOUT POSSIBILITY OF ANY FURTHER MOVES BY RUSSIA INTO EASTERN UKRAINE
- BRITISH FOREIGN MINISTER HAGUE SAYS RUSSIA'S INTERVENTION IN UKRAINE HAS CREATED A VERY TENSE AND DANGEROUS SITUATION
- BRITISH FOREIGN MINISTER HAGUE SAYS RUSSIA IS ENTITLED TO HAVE TROOPS AND NAVAL FORCES AT ITS BASES THE CRIMEA BUT NEEDS TO RETURN THEM TO THE BASES
Key event
This morning's selloff comes after the US conceded that Russia now has control of Crimea.
Here's our latest news story from our Guardian US offices:
Senior US officials dismissed claims that Washington is incapable of exerting influence on the Russian president, Vladimir Putin, but were forced to admit that Crimea had been successfully invaded by 6,000 airborne and ground troops in what could be the start of a wider invasion.Here's the full story: US concedes Russia has control of Crimea and seeks to contain Putin
"They are flying in reinforcements and they are settling in," one senior official said. Another senior official said: "Russian forces now have complete operational control of the Crimean peninsula."
On Monday, the Russian foreign minister, Sergei Lavrov, said he had discussed Ukraine with his Chinese counterpart and their views coincided on the situation there.
Lavrov said in a statement that the two veto-wielding UN security council members would stay in close contact on the issue.
Meanwhile, Ukrainian border guards reported a buildup of armoured vehicles near a ferry port on the Russian side of the Kerch Channel - a narrow sea channel dividing Russia and the Ukraine.
8.10am GMT
Other European markets followed the FTSE 100 deep in the red. The German DAX fell 1.8% at the open, Spain's IBEX fell 1.9%, and the FTSE MIB is down 2.3%.
Marc Ostwald of Monument Securities reckons the mood in the markets is "fragile, febrile and fluid".
8.04am GMT
Putin has problems: Russia's stockmarket crashes this am (MICEX falls almost 9%) while its currency hits record low against dollar.8.03am GMT
- Joel Hills (@joelhillssky) March 3, 2014
FTSE 100 tumbles 100 points at the open
The FTSE 100 index of blue chip shares has fallen by 108 point in early trading, down 1.6% at 6700.
Mining stocks are leading the fallers, as investors react to the escalating crisis in Ukraine.
Ian Williams, City analyst at Peel Hunt, explains:
The rapid escalation of the crisis in Ukraine over the weekend is now having a clear impact on global investor sentiment with risk assets, including equity indices, facing a significant sell-off this morning.8.01am GMT
Oil price up 2%
The oil price has jumped this morning, pushing up the cost of Brent crude by over $2 per barrel to $111.32.
7.58am GMT
Big sell-off in Moscow
© ReutersThe MICEX over the last year.
"There's a sell-off of everything right now," said Artem Argetkin, trader at BCS in Moscow. "Brokers, for sure, are trying close their positions at any price."
(via Reuters).
© ReutersBiggest fallers on the MICEX this morning.
Some instant City reaction to Russia's emergency interest rate hike this morning:
150bps rate hikes on an economy that was already as sick as a dog. Crimea not looking like an easy victory from here. #Russia
- Paweล Morski (@Pawelmorski) March 3, 2014
Ok. Russia is in deep trouble. The rate hike is proof. That makes Ukraine much more likely to escalate, as a diversion. Damnit!
- financial acrobat (@finansakrobat) March 3, 2014
Strong move by the CBR to slap down rouble market / provide liquidity, anyway7.46am GMT
- Joseph Cotterill (@jsphctrl) March 3, 2014
Ukraine crisis hits markets, as Russia hikes interest rates
Good morning.
Financial markets are gripped by the unfolding crisis in the Ukraine today, as Vladimir Putin's decision to send troops into Crimea over the weekend raises fears of a new Cold War.
The Russian stock market slumped when trading began, with the main MICEX index tumbling as much as 9% on the prospect of tough economic sanctions being imposed on Moscow.
European markets are expected to fall around 1% when trading begins at 8am, and the price of both oil and gold is rising.
Russia's central bank has announced an emergency interest rate hike this morning, raising its key borrowing rate from 5.5% to 7% after seeing the ruble crash to new record lows against the euro and dollar.
In a brief statement, The Bank of Russia explained:
The decision is aimed at preventing the emergence of risks to inflation and financial stability associated with the recently observed increased levels of volatility in the financial markets.The prospect of Russia being thrust into economic isolation rose further overnight, as the G7 major industrialised nations condemned Moscow's military build-up in Ukraine.
Preparation for the G8 summit in Sochi in June have also been suspended.
In case you missed it last night, here's the G7's statement on financial support for Ukraine: pic.twitter.com/Yp78op51ysChris Weston, IG's man in Melbourne, comments:
- Ed Conway (@EdConwaySky) March 3, 2014
The situation in the Ukraine is evolving seemingly by the hour and is at critical juncture. Ultimately the market wants to know to what extent the West will impose economic sanctions on Russia if there is bloodshed and further deterioration. From what we seeing right now, the scene has been set and the key personnel are in place; the orders just need to be given.I'll be tracking all the key developments in the markets, the world economy, the eurozone and business through the day.
The situation in the Ukraine is clearly the most pressing issue for markets and will trump all else this week. Money managers would have spent the weekend brushing up on their Russia/Ukraine/Crimea knowledge to impress clients, and now we are all political analysts again.
Reader Comments
to our Newsletter