Hong Kong/ New York (CNN Business)US stock futures tumbled and oil prices surged Monday morning as investors grew increasingly concerned about the consequences of Russia’s invasion of Ukraine.
On Wall Street, Dow futures plunged nearly 600 points, or 1.7%. S&P 500 futures fell 2% and Nasdaq futures were 2.7% lower.
In Asia, markets mostly declined. Hong Kong’s Hang Seng lost 1.4%, Japan’s Nikkei 225 shed 0.3%, while China’s Shanghai Composite slid 0.1%. Korea’s Kospi erased earlier gains and was nearly flat.
Global markets had been turbulent last week after Russian President Vladimir Putin launched an invasion of Ukraine, and the pain has spread beyond stocks.
The Russian ruble plummeted 36% Monday against the US dollar to 114.11, after Western countries announced new sanctions against Russia, including expelling certain Russian banks from SWIFT, the high-security network that connects thousands of financial institutions around the world.
The disruption to oil in particular is concerning to investors. Oil prices surged. Brent crude, the international benchmark, rose 4.2% to $102.05 a barrel. US crude rose 5.2% to $96.33 a barrel.
The conflict also threatens to exacerbate food inflation as Russia is the world’s top exporter of wheat, and Ukraine is also a significant exporter of both wheat and corn. Wheat futures soared 7% on the Chicago Board of Trade.
Russia continued to bear down on Ukraine’s largest cities over the weekend, but Russian fighters bore stiff resistance from Ukrainians. Peace talks are set to take place between delegates of the two nations Monday on the Ukrainian-Belarusian border.
Still, President Vladimir Putin ordered his country’s deterrence forces — including nuclear arms — be placed on high alert. That unnerved investors, concerned that the war could spill over to other countries outside of Ukraine.
Putin’s threat came after the White House and several EU nations announced the expulsion of certain Russian banks from the SWIFT banking system Saturday evening. Removing some Russian banks from SWIFT could effectively disconnect them from the international financial system, hindering their ability to do global business.
But that action could hurt European countries’ ability to buy Russian energy. Senior Russian lawmakers have said that shipments of oil, gas and metals to Europe would stop if the country’s financial system is removed from SWIFT. Russia remains a key exporter of oil and natural gas for much of Europe, and immediate alternatives that could blunt rising energy prices from a reduction of Russian exports aren’t obvious.
Some Western banks also have assets tied up in Russia, and cutting Russian banks off from SWIFT could sting.
The market had been up quite a bit toward the end of last week as investors were hopeful the spillover effect from the invasion would be limited, said Art Hogan, chief market strategist at National Securities Corporation. But Wall Street grew concerned again as the situation deteriorated over the weekend.
“There was so much information over the course of the weekend,” Hogan said. “It’s almost impossible to understand exactly what this means for the earnings power of US companies. …As things have gotten more complicated, tensions have increased, it’s hard to know exactly how you land as an investor.”
“The global demand for energy product is stronger right now than global supply,” Hogan said. “And that’s without fear that we have of disruption of that supply. If we have a major disruption that’s going to be a negative for economic activity.”
— CNN Business’ Matt Egan and Laura He contributed to this report
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