Strong fluctuations and pressures on the Stock Exchange

LAST UPDATE 15:55

Her Eleftherias Kourtali

Strong fall, calm and gentle movements and then strengthening of the pressures again is the current … story of the Athens Stock Exchange, due to the cracks caused by the geopolitical developments.

The market has shown defenses around 930 points – which it lost in the opening – and is now looking to close around 940 points, with the help of supports from selected blue chips moving in positive territory, which will depend on the reaction of the Wall. Street.

The escalation of the crisis in Ukraine after the Putin speech caused a rift in the markets with investors turning away from risk, heading for safe havens. Europe opened with a significant drop which has been limited, while FTSE 100 and CAC 40 went to positive ground.

The geopolitical risk has risen sharply and it remains to be seen how Ukraine and the West will respond, as noted by Merit Securities. All scripts are now open with no visibility for the next day. It is recalled that natural gas accounted for 42% of electricity production in 2021. It is noted that Coca Cola is the only Greek company with a presence in Russia and Ukraine, which account for 15% and 6% of sales volume.

More analytically, in the statistics of the session, the General Index records losses of 1.03% at 939.48 points, while the turnover is set at 55 million euros.

The large-cap index declined by 1.01% to 2,296.61 points, while the mid-cap index moved to -0.86% to 1,576.02 points.

The banking index has returned to neutral ground, at -1.12% and 717.74 points, with Alpha Bank falling 1.11%, Piraeus at -1.92%, while at -1, 28% and at -0.74% the losses for Ethniki and Eurobank.

Of the non-banking blue chips ELPE, Motor Oil, PPC Jumbo and OTE are moving in the positive direction, with ELPE outperforming at + 2.13%, while the biggest losses are recorded by Coca Cola at -4.07%. Terna Energeiaki, Quest and Sarantis follow with a drop of more than 2%.

Analysts generally insist that inflation and interest rate hikes pose a major threat to markets in the near future. However, they point out that, in the event of a military invasion, the markets will certainly experience waves of turmoil.

“After the recent move by Russia, we are much closer to military intervention, which of course will lead to a strong risk off the climate in the markets,” he said, adding short-term volatility in stocks due to both geopolitical factors and the Fed’s aggressive policy. The “consequences” will be higher oil prices, a sell-off of shares and a massive shift of portfolios to safe “shelters”.

As noted by Nikos Kafkas, head of the analysis department of Depolas Investment Services, yesterday’s geopolitical developments fuel uncertainty in the markets, while forecasts at this stage for the size of the price correction are quite uncertain. “It is worth mentioning that the most important support area for the General Index is located in the zone of 900-880 units”, as he adds.

Historically, geopolitical risks tend to be reflected through commodity markets, and today certainly what investors need to watch closely is gas. Europe is still heavily dependent on gas supplies from Russia, and analysts say even a small reduction in Russian supply could have a significant impact on prices and industrial production in Europe.

This could also pose a transmission risk to European inflation (gas prices were already responsible for around 1% of the annual Eurozone consumer price index in 2021), ECB policy, consumer spending, political stability and risk assets in general.

In a recent report, Capital Economics pointed out that while an escalation of the conflict would have an impact on European financial markets, it doubts it will last long. The most relevant comparison is in 2014, when Russia invaded Crimea and European stocks then “held” quite well, even when Russian stocks fell freely. Thus, he expects the reaction to be similar in the extreme scenario and global actors will continue to be the main driver of European markets this year.