Global markets have plummeted after Russian President Vladimir Putin announced an invasion into Ukraine.
The Euro Stoxx 50 fell 5.08 per cent, the German Dax was down 5.10 per cent and the Moscow Stock Exchange plunged 33.21 per cent this morning, after explosions were reported near Kviv.
The war, which has been condemned by a number of world leaders, has unsettled markets due to the impact international sanctions on Russia could have on energy and resource supply chains out of the country.
The ruble fell 0.66 per cent against the pound, and the Vix index, a measure of market volatility, soared 29.89 per cent.
Investors flocked to the safe haven of government bonds and the price of gold hit a 13-month high of almost $1,949 (£1,455) per troy ounce.
The FTSE did not suffer as much of a calamitous a drop, however, falling 2.81 per cent.
Russ Mould, AJ Bell’s investment director, said this is partially due to the UK market having a large weighting towards the energy sector, which is benefitting from a jump in oil prices.
The price of brent crude hit $100 (£75) a barrel this morning, the first time the international benchmark has hit the $100 threshold since 2014, according to the Financial Times.
Accordingly, Shell’s share price rose 3.02 per cent this morning, but BP’s dipped 2.72 per cent which Mould said is due to its near 20 per cent stake in Russian oil producer Rosneft, whose shares dived 40 per cent on Tuesday (February 22).
Terrible news for consumers
The surge in oil prices is terrible news for businesses and consumers, Mould said, and will also further stoke inflation.
He said: "Not only will energy bills keep going up, but food prices look set to jump even higher.
"Ukraine and Russia are both big food suppliers and any disruption to supplies will force buyers to seek alternative sources, which could jack up prices.”
Investor sentiment was already fragile due to high levels of inflation and rising interest rates, Mould added.
“Confirmation of war and the associated alarming news headlines around the world are likely to see equity markets go through a difficult period for longer than people might have previously expected.”
Darius McDermott, managing director of Chelsea Financial Services, said “doing nothing” is the best course of action for investors.
“Markets have already fallen so if you cash in now, you are just crystalising losses,” he said, adding that markets do recover over time.
“So if you are investing for the long term and can leave things alone, do so.”
sally.hickey@ft.com
