European stocks ended lower today, as concerning headlines regarding the Russia-Ukraine conflict dampened sentiment, while modest Western sanctions on Russia and strong corporate earnings updates helped limit further losses.
The pan-European STOXX 600 index slipped 0.3%,after it firmed 1% in early trading with banks, financial services firms and retailers leading declines.
Ukraine declared a state of emergency today and told its citizens in Russia to flee, while Moscow began evacuating its Kyiv embassy in the latest ominous signs for Ukrainians who fear an all-out Russian military onslaught.
Ukraine also blamed Russia for a string of cyberattacks as its state websites, including the government and foreign ministry home pages, remained inaccessible.
"This change of tone perfectly encapsulates the clear and present danger of headline risk with respect to market ebb and flow, as investors nervously eye Russia's next move," said Michael Hewson, chief analyst at CMC Markets.
Investors also raised concerns that sanctions imposed by Western nations on Russia could hamper oil supplies leading to more energy price pressures.
Earlier, Aidan Donnelly, Head of Equities with Davy, said there had been a lot of volatility in markets in recent days against the backdrop of Russia-Ukraine tensions but the indices had not moved a lot overall.
"Investors are taking the situation seriously," he said.
"But the problem with geopolitical events is that it's hard to map them into actionable ideas.
He pointed to individual companies and commodities that have been more impacted that others, but at the aggregate level, in terms of markets, it was less defined.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
"Gold was flat. if the market was worried, gold would have been up. As a safe haven, it's something people would have flocked to but it barely moved," he said.
Mr Donnelly said the Ukraine situation would likely contribute further to inflation.
As well as being an energy producer, Ukraine is a significant contributor to food products with grain, in particular, in line for an inflationary hit which may contribute to food price rises.
The persistent nature of inflation has given rise to fears among investors of steep interest rate hikes form Central Banks.
However, Aidan Donnelly said markets had slightly moved ahead of themselves in pricing in interest rate hikes.
"At one point, they were looking at seven rate increases in the US. That has come down to five or six. Europe looks even more anomalous. Three rates hikes were priced in. When you look at what the ECB is saying, it doesn't seem to want to move to that degree," he concluded.
