FTSE 100 OUTLOOK:
- FTSE 100[1] struggles at the start of the week amid deteriorating investor sentiment
- The Ukraine war dominates market psychology and limits appetite for risk assets
- Rising commodity prices, especially oil[2], are likely to exacerbate inflationary pressures and weaken economic activity in Europe, casting a shadow over the regional stock market
Most Read: DAX 40 in a Bear Market, FTSE 100 Dragged Down to Key Support[3]
The FTSE 100 tumbled in early trading on Monday, falling about 3% at its worst point, before clawing back most losses to finish the day 0.4% lower near the 7,000 level, in a session marked by explosive volatility amid rising geopolitical tensions in Eastern Europe. With the latest turns and twists, the index sits 9% below its February high, but has so far managed to stay out of correction territory defined by a pullback of 10% or more from a recent peak.
Russia's invasion of Ukraine late last month has shaken financial markets to the core, sending commodity prices soaring and triggering a sharp sell-off in global equities. President Putin's military attack prompted the United States and its allies to impose heavy economic sanctions on Moscow, including the expulsion of certain financial institutions from the SWIFT system and the freezing of the central bank's massive foreign exchange reserves.
So far, the West has not targeted the Russian energy sector, but the White House appears to be pushing for a ban on crude and related products from that country, according to U.S. Secretary of State Antony Blinken. For this reason, Brent built on last week’s rally in the Asian session and soared more than 15%[4], briefly topping $135 per barrel, the highest level since July 2008, before retracing some gains to trade around
