Ukraine concerns escalate, Fed remarks in focus

LONDON – European markets pulled back sharply on Monday as investors continued to track tensions in Ukraine and remarks from US Federal Reserve officials about the interest rate outlook.

The pan-European Stoxx 600 slid 2.6% in early trade, with banks plunging 4.5% to lead losses as all sectors and major stock exchanges slid into negative territory.

Multiple countries have urged their citizens to leave Ukraine amid fears of an imminent Russian invasion, with US President Joe Biden’s national security advisor Jake Sullivan warning on Sunday that the Kremlin has accelerated its extraordinary military buildup along the country’s border over the past 10 days.

Western leaders have threatened severe sanctions against Russia in the event of any incursion into Ukraine, as leaders continue to pursue diplomatic solutions. The Kremlin has denied any intention to invade its neighbor, accusing Washington of stoking “hysteria.”

Global markets have been in turmoil since a surprisingly high US inflation print last week, which prompted St. Louis Fed President James Bullard to call for a full percentage point of interest rate hikes before July.

However, fellow rate-setter and San Francisco Fed President Mary Daly said on Sunday that the central bank should be measured in its path to monetary policy tightening, noting that “abrupt and aggressive action can actually have a destabilizing effect” on growth and price stability .

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Earnings continue to drive individual share price action in Europe, with Capgemini, Michelin and BHP among those reporting before the bell on Monday.

Swiss chemicals company Clariant plunged more than 14% in early trade after delaying its 2021 earnings report amid an investigation into whistleblower allegations about its accounting practices.

At the top of the European blue chip index, steel and mining company Evraz surged more than 15%, leading only a handful of stocks in positive territory.

Commerzbank shares fell 6.3% after German Finance Minister Christian Lindner told Handelsblatt newspaper that the government would shed its stake in the bank in the long run.

Shares in Asia-Pacific also pulled back on Monday, with Japan leading losses as investors assessed both Ukraine tensions and the worsening Covid-19 situation in Hong Kong. US stock futures were flat in early premarket trade.

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