I believe, possibly hope might be a better word, that Putin has over-reached himself, underestimated the response of Europe and the West along with the steely determination of Ukrainians. Whatever happens, his actions have led to a re-building of NATO in Europe and the German turn-around has been extraordinary to watch.

Writing this note four weeks ago the focus and concern was all around the sharp move up in interest rates and persistent high inflation. The jump in oil and gas prices of the past few weeks, oil is up 20% having been higher, just feeds that inflation, while also revealing quite what a pathetic organisation OPEC+ is, I understand that their ‘emergency’ meeting lasted for fourteen minutes and resulted in no action. The bond markets are more interesting and revealing (as ever): the yield on ten-year US Treasuries sank back to 1.7%, the UK to 1.1% and German bunds back into negative territory in a general ‘flight to safety’. But, quietly, this has all now been reversed.

Stock markets have been hugely volatile with big intra-day swings and patchy liquidity but, overall, there is a logic to the headline moves over the period. The best come from America with a fall of close to 4%, they have their own energy supplies, while the German market, heavily dependent on imported Russian gas, has sunk by 12%. Japan, also a major energy importer, has seen an 8% fall for its stocks. European stocks as a whole have been hardest hit with a 12% fall for their blue-chip index. London has been sheltered at the index level thanks to the heavy weighting in oil majors and mining companies, leaving the FTSE 100 down ‘just’ 6%, it has not felt that good.

A look around the various sectors of the market reveals quite how volatile it has been. Starting with those oil majors, it has actually been quite a mixed picture, the US stocks have gained, Exxon Mobil and Chevron (particularly) are comfortably ahead but Total Energies and BP are both down around 11% and Shell is unchanged. Both BP and Shell have announced their withdrawal from Russian joint ventures (accompanied by huge write-offs), Total’s position seems to be rather more ambivalent at present. Among the miners, the major US companies, Barrick Gold and Newmont have leapt by more than a quarter, while the London-listed Russian miners have completely collapsed, quite why Polymetal International (down 87%) is still listed and trading I am not sure.

The financial sectors have seen some of the sharpest moves, clouded by uncertainty as to potential exposure to Russia and the possible impacts to international payments. The European banks have suffered most, Deutsche Bank, Société Générale and ING Groep are down 35%/40%, but the UK and US banks have also been hit, Citigroup, Morgan Stanley and Barclays showing falls of around 20%. The consumer discretionary sectors have fallen with worries about the potential impact on consumer spending, the motors saw falls of 20% for Toyota and more for Nissan Motor while Volkswagen sank 20%, the luxury end was not immune LVMH Moet Hennesy fell 16% while Nike and McDonald’s were both down around 13%, both of these latter have closed their Russian outlets.

The technology sectors were quieter (comparatively speaking) this time, Meta Platforms (Facebook) and Netflix are still struggling in the wake of their figures earlier in the year, and both fell a further 13% while Alphabet and Microsoft were down by ‘just’ 5%. Amazon was down 8% despite a recent rally after they announced a 20/1 stock split and share buy-back. The pharmaceuticals were the calmest of the sectors with only modest falls and a notable gain for AstraZeneca of close to 8% over the period.

Extraordinary times. We completely abhor this sort of aggressive behaviour and the needless suffering of so many people, I sincerely hope that more sober and civilised heads in Russia might head for negotiations rather than war, while applauding the Ukrainian people.

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