By Ian McConnell

Business Editor

STOCK markets around the world plummeted yesterday and oil prices topped $100 a barrel for the first time since 2014 after Russian President Vladimir Putin launched an invasion of Ukraine.

In London, the FTSE-100 index of leading shares finished 291.17 points or 3.9 per cent lower at 7207.01, only marginally higher than its intra-day low of 7204.74.

The benchmark MOEX Russia share index ended down 33%. France’s CAC-40 index and the German Dax both fell by nearly 4%.

Colin McLean, managing director of Edinburgh-based SVM Asset Management, flagged his belief that stock markets would fall further before turning, while declaring the investment house was not making portfolio changes in “current conditions”.

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Brent crude futures surged more than 9% to an intra-day high of $105.79 a barrel. The benchmark futures contract had by 6.50pm eased from its highs to trade around $102, up more than 5% on the day.

Mr McLean said: I think markets are likely to go lower before turning. Across the eurozone, shares are valued below the averages of the last decade, but were a bit cheaper relative to averages at the turning points in the Covid crisis and great financial crisis.

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“The US market is much in line with averages, but again sell-offs have often moved shares 20% below that, although sometimes very briefly. The UK, with its relatively high exposure to energy and mining, has held up a bit better. It looks too soon to ‘buy the dip’. However, once Russian short-term objectives are clearer, there is potential for a rally, although likely with a continuation of the defensive risk-averse pattern of recent months. Some sectors such as mining and oil should cope well with the impact of the crisis.”

He added: “Apart from inflation, and possibly rationing, in energy, there is likely to be further impact on food prices – Ukraine’s wheat and also fertiliser costs. I think markets will be more concerned about the supply shock than inflation per se.

“Indeed, in the medium term there will be some cooling of UK and global growth from the disruption this causes and it is likely some of the next planned interest-rate rises by the Fed will be deferred until the position is clearer. We are not making any portfolio changes in the current conditions.”

Russ Mould, investment director at stockbroker AJ Bell, said: “The surge in the oil price is terrible news for businesses and consumers, and fundamentally this clarifies one of the key impacts of the Russia/Ukraine war – it will serve to further stoke inflation.

“Not only will energy bills keep going up, but food prices look set to jump even higher. Ukraine and Russia are both big food suppliers and any disruption to supplies will force buyers to seek alternative sources, which could jack up prices.”

He added: “Investor sentiment was already fragile because of rising inflation and the upwards direction of travel for interest rates, but confirmation of war and the associated alarming news headlines around the world are likely to see equity markets go through a difficult period for longer than people might have previously expected.”