FTSE 100 drops on escalating Russia-Ukraine tensions

London equity markets recorded a 0.6% drop this morning, as tensions between Ukraine and Russia escalated. However, the surge in oil prices that resulted from supply worries boosted oil groups BP and Shell, limiting the damage to the FTSE 100.

The Ukrainian border has been pushed back on paper by Moscow, as Vladimir Putin recognized last night the independence of the Donetsk People's Republic and the Lugansk People's Republic. He also ordered "peacekeeping operations" in these areas - which probably means that the Russian army will be visible in these regions quite soon.

"I want to emphasize again that Ukraine is not just a neighboring country for us. It is an inalienable part of our own history, culture and spiritual space," Vladimir Putin said in a speech.

The members of the UN Security Council, meeting in emergency, have largely condemned the Russian initiative. Washington, the Eu and London are planning to impose sanctions.

Miners Polymetal International, Petropavlovsk and EVRAZ, which are exposed to Russia, fell between 4.5% and 12.5%.

Oil majors BP and Shell gained 1.6% and 2.1%, respectively, as oil prices surged due to fears of supply disruption.

 

Things to read today:

Oil majors and commodity traders at risk from new sanctions on Russia (Financial Times)

The Inflation Mess and a Financial Refuge (WSJ)

Why Ukraine's Donetsk and Luhansk Regions Are at the Center of Putin's Plan (Bloomberg)