European markets opened 1.3% lower at the beginning of the week as investors continue to monitor developments around the war in Ukraine.
European markets, specifically the Stoxx 600 index, opened 1.3% lower on Monday following the conclusion of the French presidential election. Incumbent president Emmanuel Macron secured a second term, comfortably beating his rival Marine Le Pen in Sunday’s election.
The European markets starting lower this week marks a continuation of ongoing sell-off in global markets. This sharp sell-off, primarily precipitated by the war in Ukraine, sees European investors continue to monitor developments in the region. On Sunday, the invasion of Ukraine by Russian forces entered its third month and has already seen thousands killed so far. In addition, this Eastern European conflict is also responsible for bringing about the worst refugee crisis in Europe since World War II. According to Ukrainian Prime Minister Denys Shmyhal, the war will end only after Russia totally withdraws its troops.
Outside European Markets
Elsewhere, in the Asia-Pacific region, the markets also fell sharply on Monday following a sell-off on Wall Street on Friday. Indexes in Mainland China led the losses, with the Shenzhen Component index giving up around 6% while the Shanghai composite retraced 5.09%. The main reason for the decline is China’s fresh Covid outbreaks which resulted in a lockdown and shuttered operations around the region. Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs, echoed similar sentiments by stating:
“It’s no surprise and it makes all sorts of logical sense that the market should be concerned about the Covid situation because that clearly is impacting economic activity. It’s impacting earnings potential for many parts of the market.”
As China struggles to contain its worst Covid outbreak, Beijing recently warned of more cases of the virus. According to the state capital, there has been an undetected spread of Covid for about a week now. As a result, Beijing began three days of mass testing on Monday in its central business district of Chaoyang. This means that everyone who lives or works in the region will be required to submit to testing.
Elsewhere in Greater China, the Hong Kong Hang Seng index declined 3.91% as the Hang Seng Tech index dropped 5.16%. Furthermore, shares of Bilibili, a Chinese video company, dropped 6% in Hong Kong, while Alibaba’s Hong Kong-listed shares declined 5.42%.
In Japan, the Nikkei 225 declined 1.9%, while the Topix dipped by 1.5%. Furthermore, shares of automobile company Nissan (TYO: 7201) slumped 5.05% following reports that Renault may sell part of its stake in the company. Renault is reportedly looking to focus more on electric vehicles (EVs). In neighboring South Korea, the Kospi dipped 1.67% while the Kosdaq dropped 2.52%. However, Hyundai Motor stock rose 1.39% following a 16.8% Q1 rise in net profit YoY.
Australia and New Zealand markets remain closed on Monday for a holiday.
Friday’s sell-off also affected US stock futures, causing a slight drop. This came about after the DJIA plummeted by over 900 points. The S&P 500 recorded its worst day since March, closing down 2.8% at 4,271.78, while the Nasdaq Composite slipped 2.6% to 12,839.29.