U.S. Stock futures fell, oil prices jumped and Russian authorities scrambled to keep a grip on domestic markets, as investors rushed to adjust to geopolitical developments including new sanctions against Russia. While VIX soared over 20% and VIXmain jumped over 12%。
Futures for the S&P 500 index dropped 1.8%, while futures for the tech-heavy Nasdaq-100 declined 1.7%, suggesting U.S. equities were likely to come under pressure in Monday’s trading session. TheCboeVolatility Index rose to the highest level in over a year.
The pan-continental Stoxx Europe 600 fell 1.7%, approaching a correction.
Russia’s central bank opted for an emergency interest-rate hike to combat a collapse in the ruble, more than doubling its benchmark rate to 20%, hours after imposing other restrictions on markets. It also temporarily banned brokers from handling sales of securities by nonresidents and said it was considering the feasibility of permitting other markets to open. The Moscow Exchange was closed in the European morning.
The Russian ruble plunged to a record low, trading as much as 112 rubles to $1 in the European morning. It had briefly rebounded after the rate increase, gaining 0.4% against the dollar. Market-data services showed limited price updates Monday, suggesting few transactions were taking place.
“There is very little liquidity and consequently you get this gapping in the price and you’re not getting any real reflection of where the ruble would be,” said Jane Foley, head of foreign-exchange strategy at Rabobank.
London-listed shares of Russian companies plunged, with Sberbank, the country’s largest lender, down more than 65%.Gazpromfell 55% andRosneftlost over 40%. British oil major BP said it would exit its stake in Rosneftover the weekend, which could result in a potential $25-billion loss. BP’s shares were down 6.5%.
Moscow’s invasion has heightened the turbulence in financial markets, as investors shift bets on the situation in Europe and how it might affect plans by the Federal Reserve to raise interest rates.
“There’s an enormous amount of volatility and nervousness,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “The risk of miscalculation or something getting out of hand has increased.”
Oil prices rebounded, with most actively traded futures for Brent crude, the global oil benchmark, rising 4.8% to $98.66 a barrel. Brent for delivery in April climbed to $101.61.
Brent prices last week surged to about $100 a barrel for the first time since 2014as investors calculated how the invasion could snarl the movement of resources in the region. Prices fell late in the week after initial sanctions on Russia stopped short of what many traders considered the most severe measures that would slash supply.
Over the weekend the U.S., European Union, Canada and the U.K. said they intended to cut off some Russian banks from the Swift network, a global payment system that connects international banks and facilitates cross-border financial transfers. The countries also said they would act to stop Russia’s central bank from deploying its more than $600 billion in reserves to aid the Russian economy.
Meanwhile, President Vladimir Putin ordered Russia’s nuclear-deterrence forces to be put on alert. The move would put Russia’s network of nuclear missiles into a state in which it could be used if necessary.
In bond markets, the yield on the benchmark 10-year U.S. Treasury note fell to 1.906%, from 1.984% Friday, as investors reached for the safety of government bonds. Yields fall as bond prices rise. European government bonds also rallied, with the German equivalent yield declining to 0.157%.
Gold prices rose and the U.S. dollar strengthened, in another indicator of rising risk aversion. Most actively traded gold futures rose 0.5% to about $1,897 a troy ounce, while the WSJ Dollar Index added 0.5%.