European markets are getting hammered after US and Europe widened Russian trade sanctions

Russia's MICEX index has dropped 3% while the UK, French and German markets all slid slightly. Cheers for that, America.

by Emma Haslett
Last Updated: 14 Aug 2014

Not a great day if you're in the business of, well, just about anything, in Russia: last night the US issued new sanctions targeted specifically at dozens of companies, including oil leviathan Rosneft (whose shares promptly fell 4.5%), Gazprombank and Kalashnikov, all of which are accused of helping to exacerbate the Ukraine crisis.

Not very surprising, then, that when markets opened, Moscow's MICEX index did this:

Source: Yahoo Finance

That's a 3% drop, that is.

Like the faithful dog it is, Brussels followed the US' example by announcing its own sanctions: it said it was planning to target 'entities' helping Ukrainian separatists and 'providing material and financial support' to those responsible for the annexation of Crimea and all-round, general 'destabilisation' in eastern Ukraine.

That includes preventing planned loans from the European Investment Bank, which announced last year it would lend €1bn to Russia, and the European Bank for Reconstruction and Development (incidentally based in London), which wants to lend €1.8bn to the country.

As Goldman Sachs economist Jim O'Neill (he of the 'BRICS') pointed out to CNBC, the US has a lot less to lose when it comes to this stuff.

'There's not as much on the line as for Europe. For some parts of Europe, Germany and Italy in particular, it's a big deal.'

So while US stocks rode out the threats, European markets opened lower, and kept falling. As of early afternoon, the FTSE 100 (in blue below) had dropped 0.74%, while Germany's DAX (in red) had fallen 0.97% and France's CAC 40 (green) dropped just over 1%:

Source: Yahoo Finance

Of course any efforts to calm the Ukraine crisis are to be applauded. But this one smarts...

Find this article useful?

Get more great articles like this in your inbox every lunchtime