Stocks tumbled, while bonds joined a rally in haven assets after a wall of sanctions against Russia for the invasion of Ukraine sent shockwaves through markets around the globe. Oil surged.
Almost 90% of the companies in the S&P 500 fell, with the benchmark slumping more than 1%. The yield on the two-year Treasury note dropped as low as 1.45% as short-end rates led the way down. The dollar slipped, while bets on tightening by the Federal Reserve retreated. Brent futures jumped as much as 7.3% on concern that oil supply may tighten further should Russian flows be disrupted.
Concerns are growing that a decision to freeze the Russian central bank’s assets and exclude some of the nation’s biggest lenders from critical international payment systems may increase stress in global funding markets. Russian markets were paralyzed on Monday and traders struggled to price the ruble, with the currency losing a third of its value in offshore trading at one point. Quotes were infrequent and volatile at the start of the session, and traders warned that low liquidity was making it difficult to match buyers and sellers.
President Joe Biden’s administration on Monday banned American people and companies from doing business with the Bank of Russia, the Russian National Wealth Fund and the Ministry of Finance. The U.S. is continuing to work with European Union partners to finalize the list of banks that will be cut off from the SWIFT system, a second senior administration official said. Ukraine began talks with Moscow in a long-shot bid to end President Vladimir Putin’s invasion, as the Russian army’s offer of a humanitarian corridor out of Kyiv raised fears that it was planning a full-scale assault on the capital.
What to watch this week:
- President Joe Biden State of the Union address, Tuesday
- Reserve Bank of Australia policy decision, Tuesday
- Fed Chair Jerome Powell testifies to Congress on monetary policy, Wednesday and Thursday
- OPEC+ meeting, Wednesday
- Eurozone CPI, Wednesday
- Bank of Canada rate decision, Wednesday
- ECB publishes the account of its February meeting, Thursday
- U.S. unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
- The S&P 500 fell 1.2% as of 9:30 a.m. New York time
- ‘The Nasdaq 100 fell 0.8%
- The Dow Jones Industrial Average fell 1.3%
- The Stoxx Europe 600 fell 1.1%
- The MSCI World index fell 0.8%
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.5% to $1.1212
- The British pound was little changed at $1.3399
- The Japanese yen rose 0.2% to 115.31 per dollar
- The yield on 10-year Treasuries declined eight basis points to 1.89%
- Germany’s 10-year yield declined six basis points to 0.17%
- Britain’s 10-year yield declined two basis points to 1.44%
- West Texas Intermediate crude rose 3.8% to $95.05 a barrel
- Gold futures rose 1.5% to $1,916.70 an ounce–With assistance from Akshay Chinchalkar and Abigail Moses.