Talk of an EU energy crisis is premature – but nothing is guaranteed
Weren’t stock markets meant to plunge when Russian troops were ordered over the border into Ukraine? Well, the FTSE 100 index opened 100 points lower, which fitted the script, but it quickly rebounded and spent most of the day in positive territory. It closed up 10 points: basically flat.
It was a reminder, for the umpteenth time, that stock markets are a reliably unreliable guide to geopolitics. As the fund manager Terry Smith points out often, trying to time macro events is virtually impossible since you need to know what the market was expecting and how it will react, and neither task is straightforward. Brexit and the election of President Trump were meant to shatter stock markets if they happened: share prices soared when they did.
That said, Tuesday’s mild market reaction to President Putin’s action looks little more than a holding position. The relative calm surely won’t last if Russian troops drive further into Ukraine, presumably triggering more than the “pretty tepid” sanctions, as Bill Browder, former investor in Russia and campaigner for global anti-corruption laws, described the UK response.
One suspects stock markets will take their cue from energy markets in coming days and weeks. Oil briefly touched $100 a barrel on Tuesday, the highest for seven years and a price that will eat into global growth if sustained for long. Natural gas rose as Germany halted certification of the Nord Stream 2 gas pipeline and conceded, in effect, that it needs to rethink a new energy policy.
The fund manager Amundi’s analysts noted semi-optimistically that the former Soviet Union and Europe maintained commercial relations on energy supply even at the height of the cold war and that it is therefore “premature” to talk about an
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