ASX 200 dives to 4-day low following Ukraine nuclear power plant crisis

Russia’s invasion of Ukraine has taken an even more worrying turn.

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Key points

  • ASX 200 slumps to lowest point this month on news that Europe’s largest nuclear plant is on fire
  • Ukraine warns a meltdown at Zaporizhzhia will be 10 times worse than Chernobyl
  • Almost all ASX 200 sectors are in the red but there are pockets of strength

A message from our CIO, Scott Phillips:

“G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.”

———

ASX 200 shares are taking a battering on reports that Europe’s largest nuclear power plant has been set ablaze during Russia’s invasion of Ukraine.

Fears of a nuclear disaster have rattled the Australian and global markets. The S&P/ASX 200 Index (ASX: XJO) is currently down 0.75% to 7,098 points. At one point it sunk to 7,025 points — its lowest mark this month.

The Ukrainian government said Russian troops are firing on its Zaporizhzhia nuclear power plant, reported the ABC.

10 times worse than Chernobyl warning haunts ASX 200

Part of the station is on fire, but Ukrainian firefighters are reportedly unable to put out the blaze as they are getting fired upon by the Russian invaders.

If the plant was to go into a thermo-nuclear meltdown, Ukrainian authorities believe it will be 10 times worse than the Chernobyl disaster.

It is not known if the six reactors in the Zaporizhzhia plant have been shut down. But if they have, the plant will require external power to keep the reactors cool to avoid a meltdown.

This means the plant must rely on being connected to the grid or use diesel generators to power the cooling system.

Given the fierce battle around the plant, it is unclear how close Zaporizhzhia could be to a nuclear disaster.

Why the disaster will be everyone’s problem

A meltdown will have a devastating impact not only on Ukraine but across Europe and possibly even further afield, as radioactive material could be carried into the sky.

Ukrainian President Volodymyr Zelensky said he had informed the leaders of the US, Britain, the European Union and the International Atomic Energy Agency about the threat of nuclear disaster.

“If there is an explosion – that’s the end for everyone. The end for Europe. The evacuation of Europe,” he said, according to the Australian Financial Review.

The prospect of a nuclear disaster is the last thing jittery ASX 200 investors need right now. Equities are already under stress from the threat of stagflation and the terrible floods in Queensland and New South Wales.

Stagflation refers to a period where inflation is high while economic growth slows. The war in Ukraine is only adding to inflationary pressure as it sent commodities like oil shooting higher.

ASX 200 provides little shelter

There are few places in the ASX 200 to hide today. Not even a big jump in the iron ore price has been able to save the BHP Group Ltd (ASX: BHP) share price and Rio Tinto Limited (ASX: RIO) share price from falling.

Just about every sector is in the red apart from consumer staples. Disaster or not, people have to eat. The Woolworths Group Ltd (ASX: WOW) share price jumped 1.7% while the Coles Group Ltd (ASX: COL) share price gained 0.8%.

ASX gold miners are also offering some respite. The Newcrest Mining Ltd (ASX: NCM) share price, up 3.1%, and the Evolution Mining Ltd (ASX: EVN) share price, up 1.44%, are outperforming the ASX 200 at the time of writing.

Motley Fool contributor Brendon Lau owns BHP Billiton Limited, Newcrest Mining Limited, and Rio Tinto Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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