CRH and Ryanair shares drop as Russian invasion rattles markets

Shares in building materials giant CRH and Ryanair, both of which have large exposures to Ukraine, were among the main fallers on the Irish stock market on Thursday as global financial markets were thrown into turmoil after Russia attacked its western neighbour overnight.

CRH counts among the top cement producers in Ukraine, where its operations employ about 800 people and generate as much as $300 million (€269 million) of annual sales. Shares in CRH, which also has large operations in Poland and a presence in Russia, closed 7.1 per cent lower in Dublin at €38.57, its lowest since March last year.

“We are closely monitoring the evolving security situation in Ukraine and have developed contingency plans which can be deployed where necessary to help protect our employees, their families, our assets and the continuity of our operations,” a spokesman for the company said.

Ryanair’s shares closed down 2.6 per cent, albeit off its earlier lows, as it suspended flights to and from Ukraine for at least 14 days after local authorities closed airspace to civilian carriers in the early hours of Thursday.

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Paper packaging group Smurfit Kappa, which generates about 1 per cent of its earnings in Russia, also saw its shares come under pressure, falling 6.6 per cent to €43.87.

The Iseq overall index slid 4.6 per cent to its lowest level in almost a year, with banking stocks also among the main decliners. The pan-European Stoxx 600 index tumbled 3.3 per cent, while shares also sold off on Wall Street.

Gas prices

Benchmark Dutch gas futures rose as much as 62 per cent, the most since at least 2005, while the price of Brent crude oil pushed past $100 a barrel for the first time since 2014 to breach the $105 level at one stage. Metals including gold, aluminium, copper and nickel also spiked. Russia is a key seller of commodities to global customers, with Europe relying on the nation for about a quarter of its oil and a third of its gas.

Russian forces fired missiles at several cities in Ukraine and landed troops on its south coast on Thursday after president Vladimir Putin authorised what he called a special military operation.

Western powers condemned the military incursion and vowed to step up penalties on Russia, with US president Joe Biden saying his country and its allies would impose "severe sanctions".

Inflation

“In terms of the broader global impact, a significant way the events in Ukraine will affect the rest of the world is regarding inflation, and even before we saw $100-per-barrel oil overnight, that relentless rise in commodities showed no sign of abating,” said Jim Reid, a Deutsche Bank financial markets strategist, said in a note to clients.

European banks most exposed to Russia include Austria’s Raiffeisen Bank, UniCredit and Société Générale slid.

“The invasion is a worse scenario than some investors anticipated. That’s why we are seeing the negative reaction,” said Keith Lerner, chief market strategist at Trust Advisory Services. “It caught some investors off-guard.”

Elliot Hentov, head of macro policy research at State Street Global Advisors, said it would take the market “at least a few days to assess battlefield developments” as well as the scale of additional western sanctions being planned on Russia.

“The war, sanctions and the likelihood of meaningful retaliation by Russia together will likely cause a material global recessionary shock,” Eurasia Group analysts said. “While the direct costs of the war are centred in Ukraine and Russia, sanctions on Russian banks and trade will likely cause meaningful disruptions to global trade and financial relationships with far-reaching effects. – Additional reporting: Reuters and Bloomberg