Bangkok, 22 Feb (ONA) — Oil prices surged nearly 5% and stock prices dropped after Russian President Vladimir Putin ordered forces into separatist regions of eastern Ukraine, bringing a long-feared invasion a step closer.
Russia is a major energy producer and the tensions over Ukraine have brought wide swings in volatile energy prices, on top of the inevitable risks of a broader conflict.
Oil prices already had surged recently to their highest level since 2014. By early today, the advance of US benchmark crude oil had abated slightly. It was up $3.66, or 4.1%, at $93.87 per barrel in electronic trading on the New York Mercantile Exchange. The price of Brent crude, the standard for international oils, gained $2.71, or 2.9%, to $98.10 per barrel.
US trading was closed Monday for Presidents Day, but markets in Europe and Asia shuddered as Putin moved to secure Russia’s hold on Ukraine’s rebel regions, adding to fears of a full-scale invasion.
Those actions have undermined hopes for averting a conflict that could cause massive casualties, energy shortages on the continent and economic chaos around the globe.
Germany’s DAX slipped 0.1% to 14,719.16 and the CAC 40 in Paris was flat at 6,788.13. Britain’s FTSE 100 gave up 0.4% to 7,452.18.
US futures were lower, with the contract for the S&P 500 down 0.1% and the future for the Dow industrials 0.2% lower.
So far, the biggest losses have been in Russia, where the MOEX index was down 3.5% today after losing nearly 11% on Monday. The ruble was 2.5% lower.
In Asia, Tokyo’s Nikkei 225 index dropped 1.7% to 26,449.61 while the Hang Seng in Hong Kong regained some lost ground to close 2.7% lower at 23,520.00. South Korea’s Kospi lost 1.4% to 2,706.79 and the Shanghai Composite index fell 1% to 3,457.15. Australia’s S&P/ASX 200 lost 1% to 7,161.30.
The turmoil in Ukraine has upped uncertainty at a time when investors already are jittery over how the world’s central banks, especially the US Federal Reserve, will act to counter surging inflation while coronavirus outbreaks fueled by the highly contagious omicron variant cloud the outlook for many countries.
Higher oil prices complicate that situation.
Many Asian economies depend on oil and gas imports, and even if those don’t come from Russia, the spillover effects on world markets will raise energy costs at a time when countries are still barely recovering from the pandemic.
On other fronts, Treasury yields have been falling as investors shift money into the safety of US bonds. The yield on the 10-year Treasury, which affects rates on mortgages and other consumer loans, was at 1.90% by early today, down from 1.93% on Monday.
In currency trading, the US dollar rose to 114.80 Japanese yen from 114.74 yen late Monday. The euro climbed to $1.1317 from $1.1312.
US stocks capped a week of volatile trading with a broad sell-off on Friday.
The S&P 500 and Dow Jones Industrial Average both slipped 0.7%. The Nasdaq composite bore the brunt of the selling, skidding 1.2%. Small company stocks also fell, with the Russell 2000 index down 0.9%, the Associated Press (AP) news reported.