- Global stocks slid Monday as traders assessed the impact of fresh Western sanctions on Russia.
- Brent crude rose above $100 again on fears of disruption to supply, while gold jumped 0.7%.
Global stocks tumbled Monday after Western powers moved to escalate sanctions against Russia, further isolating the country's economy over its invasion of Ukraine.
President
Futures on the Dow Jones sank 1.4%, while those on the S&P 500 tumbled 1.5%, and Nasdaq futures lost 1.3% as of 4:45 a.m. ET, suggesting a lower start to trading later in the day. The MSCI All Country World Index fell 0.3% Monday to 696.08.
"The trading environment is highly dynamic, and we maintain a defensive stance as things could get a lot worse from here," Peter Garnry, head of equity strategy at Saxo Bank, said in a note.
The US, European Union, the UK, and Canada said Saturday that certain Russian banks are now excluded from the SWIFT banking system. The move effectively blocks Russian imports and exports, according to European Commission President Ursula von der Leyen.
The powers also agreed to impose measures that effectively freeze the Russian Central Bank's international reserves, to prevent it from getting around sanctions. Foreign-held assets belonging to Putin and Russia's foreign minister have also been frozen, in what is seen as a symbolic move.
Early Monday, Russia's central bank hiked its key interest rate from 9.5% to 20%, in a bid to halt the freefall in the ruble, which has crashed to a record low against the dollar.
The international reserve measures render a large proportion of the Russian central bank's $630 billion foreign-exchange reserve war chest useless, according to Simon Harvey, head of FX analysis at Monex Europe. That's because they restrict the bank from liquidating all held securities in the euro, pound, or dollar.
"Russia has become isolated from Western financial
European stocks tumbled, as investors grappled with the uncertainty around the economic impact of more sanctions and potential retaliation from Russia.
London's FTSE 100 lost 1.4%. The pan-European Euro Stoxx 600 fell 1.6%, and Frankfurt's DAX fell 2.3%.
In Asia, the Shanghai Composite added 0.3%. Tokyo's Nikkei was about flat, while Hong Kong's Hang Seng dipped 0.2%.
Oil prices, like those for other commodities, were unsettled in the wake of the sanctions news, though there are carve-outs for energy, analysts noted. Brent briefly soared above $100 again on fears of disruption to supply.
Brent crude futures were last up 4.9% at $98.87 a barrel, while West Texas Intermediate were 5% higher at $96.31 a barrel.
Walid Koudmani, chief market analyst at financial brokerage XTB, said if the situation continues to escalate, risky assets like stocks and cryptocurrencies could see another week of losses, while investors rush to safe havens like gold and the dollar.
Gold gained 0.7% to reach $1,902 an ounce.
"More broadly, we expect the price of consumed commodities that Russia is a key producer of to rally from here — this includes oil, European gas (and hence aluminum), palladium, nickel, wheat and corn," Goldman Sachs commodities analysts said.
Meanwhile, BP fell 7% after saying it would abandon its stake in Russian oil major Rosneft, potentially taking a $25 billion hit.
Later Tuesday, investors will watch for President Joe Biden's State of the Union address. This week sees scheduled remarks from Fed policymakers including Chair Jerome Powell, which should shed light on whether their stance on interest-rate increases has shifted as worries grow about the impact of the crisis on inflation.