Stock futures fall, oil again tops $100 amid sanctions
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4 min read . Updated: 01 Mar 2022, 08:26 PM IST Russian ruble jumps after massive decline
Stock Futures Fall, Oil Again Tops $100 Amid Sanctions
BY WILL HORNER | UPDATED MAR 01, 2022 08:55 AM EST
Russian ruble jumps after massive decline
Global stocks and bond yields slipped, while oil prices rose to multiyear highs, as Russia’s invasion of Ukraine continued to whipsaw through markets.
Futures tied to the S&P 500 fell 0.3%. Blue-chip Dow Jones Industrial Average Futures also fell 0.3%, while technology-heavy Nasdaq-100 futures dropped 0.4%.
In Europe, the pan-continental Stoxx Europe 600 fell 1.2%. Stocks tied to Russia’s economy were hardest hit, with Austria’s Raiffeisen Bank, which has big operations in Ukraine and Russia, down 9%. Polymetal International, a London-listed firm with gold mines in Russia, was down by almost one-quarter, taking its losses over the last two days to over 75%. Arms makers were among the best performers.
Safe-haven assets were in demand, lifting gold prices and driving down government bond yields. The yield on the benchmark 10-year U.S. Treasury note fell to 1.783% Tuesday from 1.836% Monday. The yield on German government bonds fell into negative territory for the first time since January. Gold prices rose 0.9%.
Oil prices rallied, rising back above $100 a barrel, to their highest level since 2014. Brent crude, the international oil benchmark, rose over 5% to $103.11 a barrel. Benchmark European natural-gas prices jumped over 13%. Members of the International Energy Agency could agree as early as Tuesday to release supplies from oil reserves in an effort to keep a lid on rising crude prices.
Energy companies’ stocks gained alongside oil prices, with Occidental Petroleum and Devon Energy each rising over 2% in premarket trading. Meanwhile, Target’s shares jumped over 12% after it reported strong sales during the holiday period. Albertsons rose over 9% after the supermarket chain said it had begun a strategic review. Workday gained over 8% after reporting earnings late Monday that beat estimates.
Stock indexes around the world have been volatile in recent days as investors attempt to gauge the potential global economic impact from the invasion and resulting sanctions. Constricted supplies of Russian commodities could add to already elevated inflation, but investors hope the overall effect on the world’s biggest economies will be muted.
Cease-fire talks have failed to produce concrete results so far, but investors have welcomed the fact that they have begun. Still, Moscow is expected to increase the tempo of its assaults on major Ukrainian cities and is pouring manpower and equipment into the country.
“I am not sure what we will see from negotiations, but on the ground there will be no let up because Putin has to come away from this war with something to show for it," said Hani Redha, a portfolio manager at PineBridge Investments. “You will only see strengthened resolve from Russia."
The geopolitical crisis came when market sentiment was already fragile. Economies are facing the highest inflation in several decades, heaping pressure on central banks to raise interest rates. Investors are trying to gauge how the fighting in Ukraine might influence central bankers’ outlooks.
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Mr. Redha said the conflict could pressure inflation even more, by threatening to constrict Russian exports of oil and gas. Russia is the single biggest gas exporter, and a major supplier of crude oil.
Russian markets have been dealt a heavy blow by the invasion and the ensuing sanctions, with investors jettisoning Russian stocks. A sharp, sudden interest-rate rise from the nation’s central bank helped send the ruble tumbling.
On Tuesday, the Russian ruble regained over 6% of its value against the dollar, after falling almost 30% Monday. Market-data services have shown limited price updates this week, suggesting few transactions are taking place. The Russian stock market remained closed, after plummeting last week.
The London Stock Exchange suspended trading in shares of Russia’s VTB Bank after it said Bank of New York Mellon had resigned as the depositary for the company. JPMorgan Chase also halted trading of two funds because of the crisis in Ukraine.
Later in the day, investors will view the Institute for Supply Management’s survey of purchasing managers, which is expected to show U.S. factory activity continued to rise in February as the Omicron wave faded.
In Asia Pacific, stock markets were mixed. Japan’s Nikkei 225 rose 1.2%, while Hong Kong’s Hang Seng Index edged up 0.2%.
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