LONDON — European stocks were lower on Tuesday, with investors’ attention focused on the latest developments in the war between Russia and Ukraine.

The pan-European Stoxx 600 slid 0.8% in early trade, with household goods shedding 1.5%, while oil and gas stocks gained 1.3%.

In terms of individual share price movement, Swiss Re fell 6.8% to the bottom of the Stoxx 600, while Danish shipping giant Maersk climbed 4.8%.

Global investors are watching Ukraine closely after the country’s military said on Monday that a long-expected offensive push into the Donbas region in eastern Ukraine has started, with intensified assaults Monday in the Slobozhansky and Donetsk operational districts in the north and east of the country.

With the conflict showing no signs of ending soon, the World Bank has lowered its global growth forecast for 2022 by nearly a full percentage point, from 4.1% to 3.2%, citing the pressure that Russia’s invasion of Ukraine has placed on the global economy.

Global investors are also digesting comments from Federal Reserve Bank of St. Louis President and voting member of the Federal Open Market Committee, James Bullard, who said he would not rule out a 75-basis-point hike to interest rates this year.

However, Bullard told CNBC that his base case is still consecutive 50-basis-point rises.

“The hawkish shift of the Fed since last November has caused volatility in markets and there has been repricing, and I am very sympathetic to financial markets,” Bullard said.

“At this point, quite a bit has been priced in, we’d be following through, and there may be corners of the market that haven’t adjusted yet, and they would still have to adjust.”

Overnight, shares in Asia-Pacific were mixed in Tuesday morning trade, as investors watched for market reaction to China’s central bank announcing financial support for Covid-hit sectors.

Meanwhile, U.S. stock futures rose fractionally on Monday evening as traders navigate one of the busiest weeks of corporate earnings season.

Before the bell on Tuesday, Johnson & Johnson and insurance giant Travelers will report their latest results. Attention will be focused on the latest Netflix earnings set to be reported after the bell.

Richard-Mark Dodds, chief investment officer at Pure Value Metrics, told CNBC on Tuesday that although he’s optimistic that investors could continue to achieve returns in 2022, they would not come from the same sectors as they had in the past two or three years. Instead, Dodds suggested “defensive” sectors such as commodities, insurance and health care.

However, he suggested that in light of slowing growth forecasts, rising inflation and interest rates and the war in Ukraine, corporate earnings expectations may be too rosy at present.

“Corporates themselves as we go into Q1 earnings are facing rising costs, whether that is raw materials or wage costs. They are facing restricted supply of good and because QE (quantitative easing) is ending and because we have structural inflation, they are all facing rising interest rates,” Dodds said.

“It is going to be a difficult take for us or U.S. Q1 earnings which are forecast to rise by 5% and I think there is going to be room for disappointment, if not in delivery of Q1 but in the outlook for the rest of the year, because these headwinds are significant.”

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