Thursday February 24th


Dow futures drop more than 800 points after Russia attacks Ukraine

U.S. stock market index futures fell sharply early Thursday as Russia attacked Ukraine, sending indexes off more than 2% as the aggression sparked more unease on Wall Street. Dow futures fell 810 points, or 2.4%, while futures tied to the S&P 500 were down 2.5%, pointing further into correction territory. Nasdaq 100 futures declined 3%, hovering around bear-market levels for the tech-focused index. Oil prices popped as fighting commenced with explosions and sirens in Kyiv. West Texas Intermediate futures trading 7.2% higher at just shy of $100 per barrel. Global benchmark Brent jumped 7.7% to $104.56 per barrel, passing the $100 level for the first time since 2014. Energy companies surged amid the rising prices. Devon Energy was up 5% and Chevron rose 4.2% in premarket trading. Treasury yields tumbled, with the benchmark 10-year note declining to 1.86% as investors sought safe-haven bonds. Bank stocks were among the big early losers, with Bank of America down 4% and Bank of New York Mellon slumping 6.3% in premarket trading. Economically sensitive companies also took a hit, with Deere and Delta Air off 5% and cruise line operator Carnival sliding 6.2%. The VanEck Russia ETF, a U.S.-traded security which invests in top Russian companies, dropped nearly 25% in premarket trading on Thursday. Metals also were a big winner, as gold futures increased 3.2% to $1,970 an ounce. Bitcoin was getting hammered, most recently down 6.5% to $35,207.50. Aluminum also rose to a record. The Cboe Volatility index, a gauge of Wall Street fear, spiked to above the 37 level on Thursday. Those market and commodity moves came as Moscow launched a military action in Ukraine. In the capital of Kyiv, air raid sirens have sounded and a stay-at-home order has been issued. NATO, the most powerful military alliance in the world, is set to reinforce its presence on its eastern front following Russia’s invasion of Ukraine. “We we got yesterday, or last night, is really worse than a baseline expectation that we had or the markets had. I would argue we are talking basically another 5% to 6% down which would put us close to 20% or bear market territory,” said Binky Chadha, chief U.S. equity and global strategist at Deutsche Bank,” on CNBC’s “Squawk Box” Thursday. President Joe Biden condemned the attack, saying in a statement that “the world hold Russia accountable.” “Russia alone is responsible for the death and destruction this attack will bring, and the United States and its Allies and partners will respond in a united and decisive way,” Biden said. European stocks sold off sharply on Thursday after Russia began an attack on Ukraine, tipping a longstanding diplomatic crisis into a military conflict. The pan-European Stoxx 600 dropped 3.6% to its lowest point of the year. “The worst-case scenario of Russia invading Ukraine beyond the separatist regions is a shock to the equity and oil markets. The fallout could have sizeable negative impact on the European economy which would then dampen US activity modestly,” said Kathy Bostjancic, chief U.S. economist at Oxford Economics. “In the face of such uncertainty and negative economic fallout, the Fed is likely to raise the policy rate just 25bps in March, but it will still move forward.” Stocks have struggled recently, as the prospects of tighter Federal Reserve monetary policy have also dented investor sentiment. The Ukraine situation has added to tensions for the market, which had been worried about tighter Federal Reserve policy amid escalating inflation. Traders have adjusted their views on the Fed in recent days, with the likelihood of a 0.5 percentage point interest rate hike in March down to 17%, according to CME Group data. “With some signs of problematic wage-price dynamics emerging and near-term inflation expectations already high, further increases in commodity prices might be more worrisome than usual,” Goldman Sachs economists said in a note. “As a result, we do not expect geopolitical risk to stop the FOMC from hiking steadily by 25 [basis points] at its upcoming meetings, though we do think that geopolitical uncertainty further lowers the odds of a 50bp hike in March.” Wednesday marked another downbeat market session on Wall Street, as traders grappled with the ongoing Russia-Ukraine conflict. In the Wednesday session, the Dow dropped about 464 points, or 1.3%, and closed at its lowest level of 2022 so far. The S&P 500 fell 1.8%, moving deeper into correction and ending the day about 12% from its Jan. 3 record close. The tech-heavy Nasdaq Composite lost 2.6% and now sits close to bear market territory. On the economic data front, investors are looking ahead to GDP and jobless claims before the opening bell and new home sales figures later in the morning Thursday. In earnings, several big companies are scheduled to report Thursday. Alibaba ticked 5% lower in early trading after it reported its slowest-ever growth in quarterly revenue since going public in 2014, with sales falling below analyst forecasts as competition intensified. Coinbase, Block, Dell, Etsy and Beyond Meat are up after the close. Markets across Asia were in negative territory. In Japan, the Nikkei 225 declined by 1.81% to close at 25,970.82, while the Topix slid by 1.25% to 1,857.58. South Korea’s Kospi was down 2.6% at 2,648.80, and the Kosdaq dropped 3.32% to 848.21. The Bank of Korea kept interest rates unchanged at 1.25% at its meeting on Thursday. However, it predicted that consumer price inflation will run “substantially above 3% for a considerable time.” The Shanghai composite in mainland China fell 1.7% to close at 3,429.96 and the Shenzhen component dropped 2.2% to 13,252.24. Hong Kong’s Hang Seng index was down 3.6% in late trade. Oil prices on Thursday jumped following Russia’s invasion of Ukraine, with international benchmark Brent crude surpassing $100 a barrel for the first time since 2014. Brent crude futures rose more than 8.5% to trade at $105.11 a barrel at around midday in London. U.S. West Texas Intermediate futures, meanwhile, climbed over 8.2% to trade at $99.67. WTI had traded above $100 a barrel for the first time since 2014 earlier in the session before paring gains. Spot gold jumped as much as 2% higher on Thursday as Russian forces attacked Ukraine on the orders of President Vladimir Putin. At 10:30 a.m. in London, gold was trading at $1,968.01 per ounce, up 3.17% on the previous day and the highest since late 2020, as investors piled into safe haven assets and equity markets globally tumbles into the red. Oil and soft commodity prices are sharply higher. International benchmark Brent crude surpassed $100 for the first time since 2014. U.S. gold futures were up 3.08% at $1,969.30 per ounce.