The FTSE 100 plunged once more on Monday as the West stepped up their fight against Russia with a raft of economic sanctions.
In a unified effort from Western countries to economically punish Russia, Russia was banned from Swift and the central bank had its assets frozen.
At the time of writing, the FTSE 100 had fallen by 1.21% as markets digested the implications on the wider financial system.
The Russia central bank has been banned from accessing assets which will slow down the entire Russia financial system, and the sanctions on banks has led to queues of Russians trying to get hold of their cash, raising fears of a run on the banks.
The Russian central bank doubled interest rates to 20% after the Rouble sank 30%.
Although there was a comprehensive package of sanctions imposed on Russia, they spared the exports of oil and gas on which the Russian economy so much relies.
“Disturbing footage of Russia’s invasion of Ukraine over the weekend and the former’s decision to put its nuclear forces on high alert has served to spook investors once again, with equity markets falling across Europe,” said Russ Mould, investment director at AJ Bell.
“Weighing on the FTSE 100 was a 6.1% decline in BP, its biggest one-day fall since November 2021 and driven by the decision to exit its stake in Russian oil producer Rosneft.”
BP
BP announced it would seek a sale of its 19.75% stake in Rosneft and the financial impact would start to be evident in first quarter results.
The company is reported to have agreed to relinquish its stake in Rosneft following pressure from business secretary Kwasi Kwarteng over the weekend. BP will also step down from the board of the Russian petroleum producer.
“Attention will now turn to how exactly BP will affect an exit and likely bidders for its stake,” said Russ Mould, investment director at AJ Bell.
“There could be interest from Qatar, which already has its own position in Rosneft, or perhaps another name in the Middle East or China whose relations with Russia are less toxic.”
FTSE 100 movers
Although the FTSE 100 fell sharply, several companies saw decent gains. The top risers included BAE Systems, Hikma Pharmaceuticals and Bunzl..
BAE Systems share price enjoyed a rise of 10.6% to 722.5p on the back of Russia’s invasion of Ukraine spurring purchase orders and interest in the arms contractor.
Hikma Pharma was up 8.73% to 2,117p per share and Bunzl saw an increase of 6.27% to 2,932.5p.
Bunzl plc released its financial results from 2021 on Monday, and reported that it had seen its pretax profit amount to £568.7 million, an increase of 2.3% from £555.7 million in 2020.
Russian Listings Sink
FTSE 100 companies with a focus on Russia were gain destroyed by traders reacting to latest develops in the crisis.
Evraz shares sank 28% to trade at 147p on Monday following the new sanctions from the West on Russia.
Evraz has seen serious swing in their share price since Friday when the Russia-focused steel producer was up a good 20% after releasing their earnings report.
Net profit increased by 262% to $3.1bn in 2021 as sales jumped on higher commodity prices. EBITDA increased by 126% to $5bn.
Polymetal
Polymetal shares plunged 46% to 426p and was the FTSE 100’s top faller as investors fled the stock.
Polymetal said last week that all its operations in Russia and Kazakhstan continue as usual and the sanctions announced to that point had not affected Polymetal.
This is no longer likely to be the case for the FTSE 100 miner with fresh sanctions over the weekend.