NEW YORK: Crude oil futures yesterday reached their highest levels since 2014 on supply concerns and stocks sold off in a volatile session as investors eyed international responses after Russia sent troops into parts of Ukraine.
Markets were jittery a day after Russia's move but the safe-haven US dollar was slightly lower against major currencies while gold, another safety bet, was also in the red.
US President Joe Biden announced the first sanctions against Russia for what he called Moscow's beginning of an invasion of Ukraine, and he promised steeper punishments ahead if Russia continued its aggression.
While the S&P 500 confirmed it is in a correction by closing more than 10% under its record high, it still finished above its session low, reached before Biden spoke.
“When Biden came out and set sanctions they weren’t maybe as severe as people were fearing,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
And while investors were jittery, Pavlik said that “people are trying to sit with what they own if they’ve adjusted their portfolio ahead of all this. For those that haven’t, it’s a little late in the game”.
The European Union also agreed on new sanctions against Russia yesterday while German Chancellor Olaf Scholz halted the new Nord Stream 2 gas pipeline from Russia and Britain took action against Russian banks.
Global benchmark Brent crude traded as high as US$99.50 (RM416.55) a barrel, its highest since September 2014, before settling at US$96.84 with a US$1.52, or 1.5%, gain.
US West Texas Intermediate (WTI) crude also hit a seven-year high as it peaked at US$96 a barrel, before ending at US$92.35, US$1.28, or 1.4%, higher from Friday. The US market was closed on Monday for a public holiday.
On Wall Street, the Dow Jones Industrial Average closed down 482.57 points, or 1.42%, at 33,596.61, while the S&P 500 lost 44.11 points, or 1.01%, falling to 4,304.76 and the Nasdaq Composite dropped 166.55 points, or 1.23%, to 13,381.52.
The MSCI world equity index, which tracks shares in 50 countries, shed 0.9% after earlier falling 1.5%, with the index at levels not seen since Jan 28.
European indices pulled back after Russian President Vladimir Putin sought and got permission yesterday to deploy its armed forces outside Russian territory.
The Euro Stoxx 50 fell 0.2%, London’s FTSE 100 gained 0.1%, Frankfurt’s slipped 0.3% and Paris’ CAC 40 ended flat.
Asian stock markets had earlier ended their sessions with heavy falls.
Tokyo, Shanghai, Sydney, Seoul, Mumbai and Taipei dived at least 1%, while there were also losses in Singapore, Bangkok, Jakarta and Wellington.
Hong Kong tanked more than 3% at one point owing to a selloff in tech firms as traders again fret over the possibility China will embark on another crackdown on the sector.
A note from Oanda’s Edward Moya described the Ukraine situation as a threat to markets because of the risk energy costs will “skyrocket,“ noting that fears of war in eastern Europe have already caused a market pullback.
“Geopolitical tensions will continue to undermine economic growth and that should keep equities very choppy until the Russia-Ukraine crisis has a clear conclusion and after the financial markets have a firmer handle on how aggressive Fed tightening will be,” Moya said.
Spot gold was down 0.2% at US$1,902.71 per ounce by 1906 GMT, having hit its highest since June 1 at US$1,913.89. US gold futures settled 0.4% higher at US$1,907.40. – Reuters, AFP