European markets slump as London Stock Exchange blocks trading in Russian stocks

London Stock Exchange: European markets fall

London Stock Exchange: European markets fell on Thursday despite a stronger open. Photo: Jack Taylor/Getty Images

European markets reversed their early gains on Thursday, falling deep into the red, as the London Stock Exchange (LSEG.L) blocked trading in 27 companies with close ties to Russia.

In London, the FTSE 100 (^FTSE) fell 2.6% by the end of the day, while the CAC (^FCHI) was 2% down in Paris, and the DAX (^GDAXI) was 2.1% lower in Frankfurt.

London Stock Exchange (LSE) said it was blocking trading in certain firms “further to recent sanctions in connection with events in Ukraine,” and “in order to maintain orderly markets”.

Some of these affected include EN+ (ENPL.IL), Gazprom (OGZD.IL), Lukoil (LKOD.IL), Rosneft (ROSN.IL) and Sberbank (SBER.IL).

The move comes into effect immediately and follows similar actions from other indices. On Monday the Deutsche Borse halted trading in 16 companies with links to Russia, while the New York Stock Exchange (^AMZI) and Nasdaq (^IXIC) followed suit.

Russia-exposed miners Polymetal (POLY.L) and Evraz (EVR.L) have also been ejected from the FTSE 100 after they suffered heavy share price losses following western sanctions on Russia.

Read more: Russian stocks Evraz and Polymetal set to lose FTSE 100 status

Across the pond, the S&P 500 (^GSPC) dipped 0.5% and the tech-heavy Nasdaq (^IXIC) fell 1.1% by the time of the European close. The Dow Jones (^DJI) edged 0.4% higher.

It came as the number of Americans filing new claims for unemployment benefits fell by more than expected last week, while layoffs declined sharply in February, in the latest sign the US labour market is recovering well.

Initial claims for state unemployment benefits dropped 18,000 to 215,000 for the week ending 26 February, the Labour Department said on Thursday. It was the second consecutive weekly decline in claims.

Meanwhile, Brent crude (BZ=F), the global benchmark, topped $119 per barrel before paring back slightly, and is now up more than 20% on the week.

This was a jump to its highest level in nine years, meaning the benchmark has gained more than $118 in just a week since the Kremlin pushed troops into Ukraine. West Texas Intermediate (CL=F) was trading above $115, its highest since 2008.

Aluminium (ALI=F) hit yet another record high on Thursday, rising 2.3% to $3,650 on the London Metal Exchange, while nickel climbed over 4% to $26,935 a tonne. Russia is a major producer of both metals.

Read more: How Russia’s war on Ukraine is impacting stock prices

Victoria Scholar, head of investment at Interactive Investor said: “Alongside oil, the broader commodities complex has been staging major gains. Aluminium, coal and palm oil have all hit fresh record highs while wheat hit 14-year highs as Russia’s invasion of Ukraine and the West’s retaliatory sanctions looks set to shrink the availability of supply.

“The attack against Ukraine has highlighted the level of energy and broader commodity dependence that the West has on Russia. With further sanctions expected, the commodities complex looks set for an extension of the recent rally. Energy markets were already in bullish mode post pandemic with demand outstripping supply and geopolitical tensions have accelerated the upswing, sparking fears of deepening price instability.”

Overnight, Asian shares managed to mainly eke out gains after reassuring comments from the Federal Reserve helped Wall Street bounce.

In Japan, the Nikkei (^N225) climbed 0.7% while the Hang Seng (^HSI) rose almost 0.6% and the Shanghai Composite (000001.SS) lost 0.1%.

The rush to commodities also lifted resource-rich stocks in Australia, while Indonesia was just off a record high.

Watch: Why are gas prices rising?

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