Crude jumps, stocks slide, ruble slumps to record high on tough Russian sanctions

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A 3D-printed oil pump jack is seen in front of the displayed stock chart and the words “Oil Stocks” in this illustrative image, April 14, 2020. REUTERS/Dado Ruvic/Illustration/Files

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  • US and Australian bond yields fall as investors seek safe havens
  • The euro sinks with the Aussie, the kiwi; safe haven dollar, yen, gold gain
  • Asian stocks give up early gains; US and European futures plummet

TOKYO, Feb 28 (Reuters) – Crude oil surged as the ruble plunged nearly 30% to a record high on Monday after Western countries imposed tough new sanctions on Russia over its invasion of Ukraine , in particular by blocking certain banks from the global payment system SWIFT.

Demand for safe havens boosted bonds, along with the dollar and yen, while the euro fell after Russian President Vladimir Putin put nuclear forces on high alert on Sunday, the fourth day of the biggest assault on a European state since World War II. Read more

Rising tensions heightened concerns that oil supplies from the world’s second-largest producer could be disrupted, sending Brent futures up $4.21 or 4.3% to $102.14. U.S. West Texas Intermediate (WTI) crude futures rose $4.58 or 5.0% to $96.17 a barrel.

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“I tell clients that all we know for certain is that energy prices will rise and there will be beneficiaries,” said John Milroy, financial adviser to Ord Minnett in Sydney.

“It’s an old cliché, but it’s true that uncertainty drives movement in both directions.”

Asia-Pacific stocks fell after spending the morning session mostly in the green, putting them in line with declines in US and European stock futures.

The Japanese Nikkei 225 (.N225) fell 0.25%, while the Chinese blue chips (.CSI300) fell 0.36%. Australia’s benchmark index (.AXJO), however, added 0.64%, boosted by energy shares.

The MSCI regional stock index (.MIAP00000PUS) lost 0.58%.

U.S. emini stock futures were pointing down 2.35% on the restart, while pan-European EURO STOXX 50 futures fell 3.90%. FTSE futures were down 1.21%.

“We had a deluge of very negative news this weekend,” said Kyle Rodda, market analyst at IG Australia. “We talk about risks to financial stability, and sprinkle on top of that the threat of nuclear war.”

“Volatility is heightened,” he said. “Price action is incredibly choppy.”

The 10-year US Treasury yield fell around 9 basis points to 1.89%, and equivalent Australian yields fell around 6 basis points to 2.177%.

The euro slipped 1.1% to $1.11465 and 1.1% to 128.785 yen, while the risk-sensitive Australian and New Zealand dollars fell 0.78% and 0.88%, respectively.

The ruble plunged as much as 29.67% to a record high of 119.5 to the dollar.

Gold rose more than 1% to around $1,909 on demand for the safest assets.

“This volatility is going to go on for some time yet, until the dust settles,” said Shane Oliver, chief economist at AMP Capital.

In the meantime, “markets are going to swing from headline to headline,” he said.

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Reporting by Kevin Buckland; Additional reporting by Scott Murdoch and Alun John; Editing by Stephen Coates

Our standards: The Thomson Reuters Trust Principles.

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