European Stocks Tumble In Wake Of Russian’s Credit Downgrade

European Stocks Tumble In Wake Of Russian’s Credit Downgrade

By Wires | The Trent on April 25, 2014
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Russia, Putin, Election
Russia's President Vladimir Putin chairs a meeting in his Novo-Ogaryovo residence outside Moscow, on February 26, 2013. (Photo Credit: ALEXEI NIKOLSKY/AFP/Getty Images)

European stocks waned Friday, burdened by the renewed escalations of tensions in Ukraine.

Russian assets also came under pressure after ratings firm Standard & Poor’s slashed Russia’s credit rating by one notch to the brink of junk. Shortly afterward, the country announced a surprise interest-rate hike, citing a heightened risk of inflation.

The Stoxx Europe 600 index was down 0.5% by midmorning, having earlier in the session traded as much as 0.7% lower, tracking Asian stock market losses overnight. Harder hit, Frankfurt’s DAX fell by as much as 1.2%, due to Germany’s strong trade links with Russia, while the U.K.’s FTSE 100 and France’s CAC-40 both edged 0.3% lower.

U.S. stocks were set for a lackluster open, with futures contracts indicating a 0.1% opening loss for the S&P 500. Changes in futures don’t necessarily predict market moves after the opening bell.

Moscow’s RTS declined by as much as 2% before bouncing back slightly.

“The downgrade, while not entirely unexpected, has nonetheless fueled further market stress,” Société Générale GLE.FR -1.84% analyst Benoit Anne wrote in a note. The ruble weakened 0.6% against the dollar to 36.

“The boost to equity markets from a decent enough week of U.S. corporate earnings news, and largely reassuring economic data, is being limited by revived geopolitical uncertainty,” said Ian Williams, economist and strategist at brokerage Peel Hunt.

Thursday, Microsoft MSFT +1.38% posted a smaller-than-expected decline in profit while Verizon VZ -0.84% said that it had added more subscribers in the first quarter than analysts had expected, supplementing to a number of upbeat earnings headlines out of the tech sector earlier this week.

In Europe, earnings continued to underwhelm as KPN KPN.AE -1.59% shares took a beating, after the Dutch telco reported a 98% drop in first quarter net profit, burdened by lower income from its consumer mobile and corporate businesses.

In commodities markets, gold was trading around 0.4% higher, at $1,295.70 per ounce, while Brent Crude oil edged 0.4% lower to $109.89 per barrel.

(via The Wall Street Journal)

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