The rouble – Russia’s official currency – has fallen by 25% this year alone. This news is likely to threaten the Russian economy as the weakened rouble affects Russian purchasing power and can send Russian inflation skyrocketing. The rouble has fallen to such a low level that it now takes more than 100 roubles to buy one dollar, making it much more expensive for Russians to buy goods and services abroad. When the war began, they tried to push the rouble down. But when the price of oil and gas rose sharply, the money flowed into the Russian treasury.
Japan is experiencing major drops, with major Nikkei reportedly down 1.1% and China's HangSeng down 2.4%. This is due to problems at one of the largest property developers in China, according to equity manager Lars Hytting from Artha Kapitalforvaltning. He states: "Country Garden has stopped paying the interest on some of its loans, and this is creating uncertainty throughout Asia". In particular, shares within properties, related to cyclical consumption and materials, have been sold by investors.
As we reach the summer slump within the stock markets, there are some data points that will spark investors’ interests. The Chinese Hang Seng closed down 1.6% off the back of growing concerns surrounding Chinese deflation. In the meantime, things are looking brighter in Europe by mid-morning, with France’s Cac 40 and Germany’s Dax reversing losses to trade 0.3% and 0.5% higher respectively. The FTSE 100, however, with its greater share of China-sensitive commodity stocks, was 0.2% lower.
Sources: Euroinvestor, Borsen.dk, Investor Chronicle