Potential War Causes Stocks to Fall

Recently the tension has boiled to the point that war could be on the horizon between Russia and Ukraine, which has caused some stocks to fall.

It’s never been a secret that since the fall of the USSR, Russia and Ukraine have been at odds. Often, we see the results of rumors, tense talks, and potential issues in various stock markets. Recently, changes in the STOXX 600 have shown the ugliness of what’s been going on in the Eastern European area. It might sound odd that issues in that part of the world would cause problems for the automotive industry, but they have.

Four Weeks and Still Falling

A few days of a market falling, with the exception of a complete drop off a cliff, don’t typically bother investors too much, but the STOXX 600 index has been falling for four straight weeks. The calendar turned to 2022, and this index is acting like there’s a financial pandemic going on right now. This index has been dropping for the past few weeks due to the possibility of higher interest rates and the tensions that are rising in Russia and Ukraine. If this continues, it’s not going to be long before a crash takes place for this index, which could impact the entire world.

What Losses Were Reported

To put some numbers on the troubles, we see this index has fallen by one percent as a whole with some markers losing up to two percent of their price in just a couple of days. Overall, last week, this entire stock index fell by 1.8 percent. While that doesn’t sound like a large amount, it could be devastating for some companies. This loss shows the largest drop in stock prices for this index over the past few months. Unfortunately, it doesn’t appear as though the talks of war will subside, which means the stocks will likely continue to fall.

Maybe a Glimmer of Hope

The battle over a border is nothing that anyone wants to see, and Russia has wisely given signals that it would like to avoid a war with Ukraine. This could mean relocating troops to other areas or creating peace talks, but weekend delays only give the two sides time to either calm down or ratchet up their anger toward each other. Hopefully, these two sides will engage with proposals from the United States to try and resolve their differences without a battle taking place.

Technology Took a Hit

The sector that fell the most overall in this European market was technology. The fall of 1.7 percent overall marked the worst month since 2008. This decline could easily impact other industries that rely on technology to improve their products. We don’t know when this area of the market will rebound, but we expect it will be much sooner than later, giving us hope that the quarter will at least become one that shows some growth or very little negative results.

It’s Not All Doom and Gloom

While turmoil and harsh sentiments are being tossed around in Eastern Europe, the Western part of the continent has seen positive growth. France posted its strongest growth last year. This is based on reporting going back five decades, which made it a banner year for the country. The growth reached seven percent for the second-biggest economy in the area. This means France was able to bounce back from the pandemic much faster than expected and certainly sooner than other countries in the area.

The Opposite Took Place in Germany

A little closer to the potential war between two neighbors, Germany saw its economy fall much more than expected, which also led to stocks slipping in the market.

The reason for the fall in Germany doesn’t have much to do with the trouble with their neighbors; it has to do with the pandemic-related restrictions that caused activities to be restricted in the country.

The Automotive Stocks Took a Hit

Similar to the rest of this particular index, auto stocks fell 1.8 percent, with Volvo taking the worst of the drop by falling 3.5 percent to show lower fourth-quarter earnings than expected. This fall in the automotive industry for this European index doesn’t give much hope for the weeks to come, but we do expect some relief in this industry by the end of the year.

And We Thought it Was Bad in the US

With war talks between two neighboring countries, stocks that have fallen more than they have in many years, and industries that are struggling, we can certainly be glad that we don’t have as many of these same problems going on in the United States. Globally, we are all looking forward to a time when things get back to some type of normal. Thankfully, and hopefully, that will take place much sooner rather than later.