Stock futures tumble amid Russia’s invasion, sanctions escalation

US stock futures sank and energy prices soared Monday morning after an escalation of sanctions against Russia amid an ongoing conflict in Ukraine stoked further uncertainty over the outlook for global financial markets.

Contracts on the S&P 500, Dow and Nasdaq each fell by more than 1% Monday morning. West Texas intermediate crude oil prices (CL=F) soared to as much as $99.10 per barrel before paring some gains. Brent crude (BZ=F), the international standard, rose to a near seven-year high of more than $104 per barrel. Gold prices jumped while Treasury yields slid as investors piled into safe haven assets.

The moves Monday came following a tumultuous weekend of fighting in Ukraine as Russia continued its attacks. A new set of sanctions slammed Russia as major Western countries responded to the invasion. And news that Russian President Vladimir Putin had put the country’s nuclear deterrence forces on high alert added to jitters across global financial markets.

The US, European Commission, France, Germany, Italy, UK and Canada issued a joint statement Saturday agreeing to exclude certain key Russian banks from the SWIFT messaging system, which helps facilitate transactions for trillions of dollars globally. The US on Monday also said it was further prohibiting Americans from transacting with the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federations and the Ministry of Finance of the Russian Federation.

The SWIFT bank bans “would make it more difficult (though not impossible) for these institutions to make cross-border payments,” Capital Economics group chief economist Neil Shearing wrote in a note Monday. “So far at least the West has stopped short of a ban on energy imports from Russia, which would be the most powerful sanctions they could implement.”

“At the same time, the US, European Union, UK and Canada have announced sanctions on the Central Bank of Russia (CBR),” Shearing added. “This is perhaps a more significant move since it will substantially reduce the ability of the CBR to liquidate its foreign assets to support the ruble and help Russian firms service FX-denominated liabilities. Around 40% of Russia’s international reserves are held in the financial systems of the countries that have signed up to these sanctions.”

The newest sanctions from the West add to a host of others unleashed against major Russian financial institutions, sovereign debt and key officials last week. The ruble opened lower by about 30% against the dollar in offshore trading, and Russia’s central bank more than doubled its benchmark interest rate to a near two-decade high of 20% in a move to try and help counter the currency’s depreciation.

“While market fundamentals in the US have seen very minimal deterioration, sentiment-driven concerns are unlikely to change anytime soon. From a market perspective, sanctions against Russia will likely have the largest impact on currency markets, including the ruble, the Euro and the dollar,” David Bahnsen, chief investment officer of The Bahnsen Group, wrote in an email Monday morning.

Still, investors have closely monitored for further fallout for global financial markets and corporations. Automakers including Volkswagen, Renault and Finnish tire-maker Nokian Tyers said late last week they were halting or shifting production due to supply chain disruptions and shortages exacerbated after Russia’s invasion of Ukraine. And while sanctions have stopped short of curbing energy exports from Russia, the world’s third-largest oil producer, traders have remained on alert for any direct or indirect impact of the geopolitical conflict on the already tight global energy markets.

“We continue to think that the overall impact on global supply chains will be relatively small, but the expulsion of some Russian banks from SWIFT means that non-energy trade between Russia and Europe is likely to slump,” Capital Economics’ Shearing said. “Attacks on infrastructure that carries gas to Western Europe may push up prices further and add to inflation pressure. And the additional sanctions may prompt retaliation from Russia, which could cut energy imports to Western Europe.”

7:55 am ET Monday: Stock futures sink as Russia’s invasion, sanctions escalate

Here were the main moves in markets Monday morning:

  • S&P 500 futures (EN=F): -45 points (-1.03%), to 4,335.00

  • Dow futures (YM=F): -304 points (-0.89%), to 33,690.00

  • Nasdaq futures (NQ=F): -136.25 points (-0.96%) to 14,044.25

  • Raw (CL=F): +$4.14 (+4.52%) to $95.73 a barrel

  • Gold (GC=F): +$23.20 (+1.23%) to $1,910.80 per ounce

Photo by: NDZ/STAR MAX/IPx 2022 2/17/22 Atmosphere at the NY Stock Exchange in New York City.

Photo by: NDZ/STAR MAX/IPx 2022 2/17/22 Atmosphere at the NY Stock Exchange in New York City.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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