Wall Street joins global swoon over Russia’s attack on Ukraine – Economy – War in Ukraine
The Wall Street traffic sign is seen on February 24, 2022 in New York City. AFP
Oil prices jumped more than $7 a barrel and futures on Wall Street’s benchmark S&P 500 index and the Dow Jones Industrial Average fell more than 2.5%.
Market benchmarks in Europe and Asia fell 5% as traders tried to determine the extent of Putin’s incursion and the extent of Western retaliation.
Energy prices surged, fueling inflation fears. Europe’s spot price for natural gas, for which the continent depends on Russia for supply, jumped 31%.
Brent crude jumped above $100 a barrel in London for the first time since 2014 on concerns over a possible disruption of supplies from Russia, the third-largest producer. Benchmark U.S. crude followed close behind at $99 a barrel. Wheat and maize prices also jumped.
The ruble fell 7.5% against the dollar overnight but recovered slightly, down around 5% in the morning.
Financial markets are in a “flight to safety and may have to factor in slower growth” due to high energy costs, ING’s Chris Turner and Francesco Pesole said in a report.
In Brussels, the president of the European Commission said Thursday that the European Union of 27 countries was planning “massive and targeted sanctions” against Russia.
“We will hold President Putin accountable,” said Ursula von der Leyen.
The FTSE 100 in London fell 3.3% after Europe woke up to news of explosions in the Ukrainian capital of kyiv, the major city of Kharkiv and other areas. The DAX in Frankfurt plunged 5.4% and the CAC in Paris lost 4.9%.
The Moscow Stock Exchange briefly suspended trading in all of its markets on Thursday morning. After trading resumed, the ruble-denominated MOEX stock index fell more than 20% and the dollar-denominated RTS index plunged more than a third.
That comes on top of Wednesday’s 1.8% plunge for the S&P 500 to an eight-month low after the Kremlin said rebels in eastern Ukraine had requested military assistance. Moscow had sent soldiers to some rebel-held areas after recognizing them as independent.
Some analysts expect the conflict to push investors out of many tech stocks, with the exception of the cybersecurity sector.
“Growing concern that a massive cyberwar could occur in the near term, which would certainly catalyze increased spending on preventing sophisticated Russia-based cyberattacks,” Wedbush Securities analysts wrote in a note to clients.
Putin said Russia must protect civilians in eastern Ukraine, a claim Washington predicted it would make to justify an invasion.
President Joe Biden denounced the attack as “unprovoked and unwarranted” and said Moscow would be held accountable, which many took to mean that Washington and its allies would impose additional sanctions. Putin accused them of ignoring Russia’s request to prevent Ukraine from joining NATO and offering security guarantees to Moscow.
Washington, Britain, Japan and the EU have previously imposed sanctions on Russian banks, officials and business leaders. Other options include excluding Russia from the global banking system.
The price of oil in international markets rose to $101.27, while West Texas Intermediate rose $7.65 to $99.75 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to $92.10 on Wednesday.
In Asia, the Nikkei 225 in Tokyo fell 1.8% to 25,970.82 and the Hang Seng in Hong Kong fell 3.2% to 22,901.56. The Shanghai Composite Index fell 1.7% to 3,429.96.
Asian economies face lower risks than Europe, but those that need imported oil could be hit by higher prices if Russian supplies are cut off, forecasters said.
Seoul’s Kospi lost 2.6% to 2,648.80 and Sydney’s S&P-ASX 200 fell 3% to 6,990.60.
The Indian Sensex fell 4.7% to 54,529.91. New Zealand lost 3.3% and Southeast Asian markets also fell.
Investors were already worried about the possible impact of the Federal Reserve’s plans to curb inflation by withdrawing ultra-low interest rates and other stimulus measures that have pushed up stock prices.
The dollar weakened to 114.69 yen from 114.98 yen on Wednesday. The euro fell to $1.1168 from $1.1306.