Stocks slide, Brent hits $100 on Russian incursion: Markets Wrap

State-run TASS said Putin decided to conduct a special operation to “protect” the Donbas region and that Russia doesn’t plan to occupy Ukraine.

Crude surged on possible risks to Russian energy exports, with Brent touching $100 a barrel. The flight to safer investments saw the U.S. 10-year Treasury yield fall to 1.90%. Gold hit the highest since early 2021. The dollar and yen jumped, while the euro and the ruble retreated.

Western powers are set to step up sanctions to penalize Russian aggression. President Joe Biden announced he would impose “further consequences” on Russia and that he would be speaking with other G-7 leaders.

Source: Bloomberg

The cost of everything from oil to grains to metals has jumped on worries that commodity flows will be disrupted by the Ukraine crisis. That heralds fresh challenges for a global recovery that was already struggling with elevated price pressures and tightening monetary policy.

“Expect volatility to really persist in the next few months,” Lale Akoner, senior market strategist at BNY Mellon Investment Management, said on Bloomberg Television. She added geopolitical risks are flaring at a “very inopportune time” since markets are grappling with receding stimulus support.

In cryptocurrencies, Bitcoin slid to around $35,000 amid risk aversion. Second-largest token Ether also suffered heavy losses.

Before the latest Ukraine drama, Federal Reserve Bank of San Francisco President Mary Daly said she’s watching geopolitical developments but has yet to see anything that would dissuade her from backing an interest-rate increase next month.

Markets pared back bets on the number of rate increases by the Fed in 2022, with about six 25-basis-point hikes expected. Investors remain worried that Fed tightening could choke the expansion in the world’s largest economy.

“Policy mistakes at this point in time are almost guaranteed,” Shana Sissel, president at Banríon Capital Management, said on Bloomberg Television. “The question isn’t, is there going to be a policy mistake, but how bad will it be? Will the Fed hike too much too fast, will they front-load everything?”

Here are some events to watch this week:

• Bank of Korea policy decision Thursday
• EIA crude oil inventory report Thursday
• Fed officials Loretta Mester and Raphael Bostic speak Thursday
• U.S. new home sales, GDP, initial jobless claims Thursday
• U.S. consumer income, U.S. durable goods, PCE deflator, University of Michigan consumer sentiment Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 2% as of 12:54 p.m. in Tokyo. The S&P 500 fell 1.8%
• Nasdaq 100 futures slid 2.4%. The Nasdaq 100 fell 2.6%
• Japan’s Topix index fell 1.4%
• Australia’s S&P/ASX 200 index fell 3.2%
• South Korea’s Kospi index shed 2.5%
• Hong Kong’s Hang Seng index fell 2.8%
• China’s Shanghai Composite index lost 0.9%
• Euro Stoxx 50 futures slid 3.1%

Currencies

• The Japanese yen was at 114.72 per dollar, up 0.3%
• The offshore yuan traded at 6.3139 per dollar
• The Bloomberg Dollar Spot Index rose 0.3%
• The euro was at $1.1239, down 0.6%

Bonds

• The yield on 10-year Treasuries fell 10 basis points to 1.89%
• Australia’s 10-year bond yield was at 2.17%, down 10 basis points

Commodities

• West Texas Intermediate crude rose 3% to $94.83 a barrel
• Gold was at $1,928.33 an ounce, up 1%