FTSE 100, European Union, ECB, Russia, Ukraine – Talking Points
- FTSE halts recent slump as EU looks to bolster energy, defense spending
- UK PM Boris Johnson announces ban on imports of Russian oil
- For technical levels on the FTSE 100, please click here
The FTSE 100 looked quite perky on Tuesday as European traders shrugged off a sluggish Monday session on Wall Street. US benchmarks posted their largest losses in months on Monday, but European markets traded higher as rumors swirled over joint EU funding to bolster energy and defense spending. Gains were a welcome reprieve for the UK benchmark index, which had fallen sharply from February’s highs near 7,700.
Europe has certainly felt the pinch from the ongoing Russian invasion of Ukraine, as equity benchmarks tumble and energy prices continue to soar. The UK has moved to ban imports of Russian gas and other refined products, with the United States also announcing similar actions just earlier this morning. The bans of Russian imports will likely see energy prices continue to rise, as robust demand still outweighs supply coming to the market.
FTSE 100 Daily Chart
Chart created with TradingView
Shares remain under pressure in London as inflation fears mount off the back of Russian energy bans. With energy prices already sky high around Europe, the move may be unpopular across the EU given the potential for further increases in the cost of living. Inflationary concerns continue to weigh on investor sentiment, as nearly all energy futures continue to trade at elevated levels.
As seen in several central bank press conferences of late, the Russian invasion of Ukraine has forced many to revise inflation risks higher, and global growth forecasts lower. This backdrop provides a bleak outlook for risk-assets in the near term. Market participants will likely now turn to the ECB meeting later this week to see if policymakers will be adjusting the path of/to normalization due to the ongoing humanitarian crisis in Ukraine.
European Economic Calendar
Courtesy of the DailyFX Economic Calendar
March saw an abrupt decline for most EU equity benchmarks as a result of Russia’s invasion of Ukraine. In just 3 sessions, the FTSE 100 fell from 7,400 to below 6,800, before recovering slightly. On the daily timeframe, price continued to close and hold support around 6,900, after falling below the key psychological threshold of 7,000. Longs may target the 0.786 Fib retracement of the Jan ’20 to March ’20 selloff, which can be found around 7,073. Bulls continue to have key support below around 6,900, which will reinforce any renewed attacks on higher prices.
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— Written by Brendan Fagan, Intern
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