Global markets sink amid escalating Ukraine fears
Diplomatic efforts over the weekend by the Biden administration and its Western allies did little to calm fears that Russia was poised to invade Ukraine. Asian markets closed down in the red across the board, with Japan’s Nikkei 225 declining more than 2.2 percent and Hong Kong’s Hang Seng Index sliding 1.4 percent. European indexes were all lower in midday trading, with France’s CAC40 dropping 2.6 percent and the benchmark Stoxx 600 index shedding nearly 2 percent.
On Wall Street, stocks wavered in morning trading before turning negative. Around 10:45 a.m., the Dow Jones industrial average had slipped more than 300 points, around .9 percent. The Standard & Poor’s 500 index declined roughly .6 percent, while the tech-heavy Nasdaq oscillated between positive and negative territory. All three indices are down 4 percent or more year-to-date, according to MarketWatch.
“Investors fear the alarm clock is about to sound on a physical battle between Russia and the Ukraine,” Danni Hewson, financial analyst at AJ Bell, said Monday in comments emailed to The Post. “Should Russia go to war with Ukraine, there is no telling how long the battle will last, and the damage wrought on the stock market.”
Cboe’s volatility index was up more than 7 percent Monday. The so-called Wall Street fear gauge has soared more than 50 percent in the past month amid acute volatility, according to MarketWatch. Despite notching some gains last week, markets were sent reeling after the Labor Department reported the largest annual inflation spike since February 1982, fueling speculation that the Federal Reserve could move more aggressively than expected to raise interest rates.
Now, concerns are colliding with worries over what the fallout from conflict with Russia will mean for the global economy. President Biden warned over the weekend that the United States and its allies would respond “decisively and impose swift and severe costs” if Russia attacked its neighbor. Administration officials insist any allied response this time will be much harsher than the sanctions imposed following Russia’s 2014 takeover of Crimea.
Russia is one of the world’s biggest oil producers, and military or economic conflict with the country has the potential to sow major disruption in energy markets and beyond. The prospect of tough financial sanctions, probably targeted at Russia’s state-owned banks, is meant to deter a Russian invasion by highlighting the danger of capital outflows, a plunging currency and bank runs. Russian investors already have paid for Putin’s belligerence: The benchmark RTS stock index is down by about 25 percent since its late-October high.
Ivan Feinseth, chief investment officer at Tigress Financial Partners, said that although stocks have a long track record of shrugging off geopolitical tensions, most of those have been viewed as “easily contained by the U.S.,” with little effect on global financial markets.
“However, President Biden has very little in his arsenal to use to deter Russia against any aggression other than economic sanctions and boycotts, which have proved futile in the past and very hard to enforce,” Feinseth noted Monday in comments emailed to The Post.
Oil prices moved lower but remain elevated amid warnings from U.S. officials that Russia’s invasion of Ukraine could occur at any moment. Brent crude, the international oil benchmark, was trading down about .5 percent, around $93.95 per barrel. West Texas Intermediate crude, the U.S. oil benchmark, was trading 0.3 percent lower, around $92.83.
Gold, an investor safe haven in times of turmoil, continued its upward march, buffetted by the maelstrom of tensions. It climbed 1.43 percent to trade around $1868.60 per troy ounce.
